American Water (AWK) AI Stock Analysis

• Market Cap: $24.84B
• Dividend Yield: 2.51%
• Average Volume (3M): 1.59M
• Price to Earnings (P/E): 22.7
• Beta (1Y): -0.24
• Revenue Growth: 12.29%
• EPS Growth: 13.13%
• Country: US
• Employees: 6,700
• Sector: Utilities
• Sector Strength: 65
• Industry: Regulated Water
• EPS (TTM): 1.94
• Shares Outstanding: 195,177,150
• 10 Day Avg. Volume: 803,161
• 30 Day Avg. Volume: 1,589,828
• PEG Ratio: 2.26
• Price to Book (P/B): 2.35
• Price to Sales (P/S): 5.18
• P/FCF Ratio: -29.93
• Enterprise Value/Market Cap: 1.70
• Enterprise Value/Revenue: 8.34
• Enterprise Value/Gross Profit: 13.72
• Enterprise Value/Ebitda: 14.56
• 1Y Price Target: $134.17
• Price Target Upside: 3.79% Upside
• Rating Consensus: Moderate Sell
• Number of Analyst Covering: 6
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 73 Outperform
• Price Target: $148.00 ▲(14.49% Upside)

American Water's overall stock score reflects stable financial performance and positive corporate events, such as the strategic merger and rate approval, which bolster future growth prospects. Technical analysis and valuation are neutral, supporting a balanced outlook.

Positive Factors

Strategic Merger

The merger with Essential Utilities is expected to enhance operational efficiency and expand customer service capabilities, providing long-term growth opportunities and strengthening commitments to community and water affordability.

Rate Approval

The approval of higher base rates in Kentucky supports ongoing infrastructure upgrades and service reliability, ensuring stable revenue growth and financial health.

Revenue Growth

Consistent revenue growth indicates strong market demand and effective business operations, which are crucial for long-term financial stability and expansion.

Negative Factors

Negative Free Cash Flow

Sustained negative free cash flow could limit the company's ability to invest in growth opportunities and manage debt, impacting long-term financial flexibility.

Decreased Net Profit Margin

A decrease in net profit margin suggests pressure on profitability, which may affect the company's ability to generate sufficient returns and invest in future growth.

Debt Levels

Moderate leverage is typical for the industry but could pose risks if not managed carefully, potentially affecting the company's financial stability and investment capacity.

American Water Business Overview & Revenue Model

Company Description

American Water Works Company, Inc., through its subsidiaries, provides water and wastewater services in the United States. It offers water and wastewater services to approximately 1,700 communities in 14 states serving approximately 3.4 million active customers. The company serves residential customers; commercial customers, including food and beverage providers, commercial property developers and proprietors, and energy suppliers; fire service and private fire customers; industrial customers, such as large-scale manufacturers, mining, and production operations; public authorities comprising government buildings and other public sector facilities, such as schools and universities; and other utilities and community water and wastewater systems. It also provides water and wastewater services on various military installations; and undertakes contracts with municipal customers, primarily to operate and manage water and wastewater facilities, as well as offers other related services. In addition, the company operates approximately 80 surface water treatment plants; 480 groundwater treatment plants; 160 wastewater treatment plants; 52,500 miles of transmission, distribution, and collection mains and pipes; 1,100 groundwater wells; 1,700 water and wastewater pumping stations; 1,300 treated water storage facilities; and 76 dams. It serves approximately 14 million people with drinking water, wastewater, and other related services in 24 states. American Water Works Company, Inc. was founded in 1886 and is headquartered in Camden, New Jersey.

How the Company Makes Money

American Water generates revenue primarily through its Regulated Utilities segment, where it charges customers for water and wastewater services based on usage rates set by state regulatory agencies. The company also earns revenue from fixed fees and service charges. In its Market-Based Operations segment, American Water provides specialized services such as water system management and consulting for municipalities and industries, contributing additional revenue. The company benefits from significant partnerships with local governments and other entities, which often lead to long-term contracts and stable cash flows. Regulatory frameworks that allow for rate adjustments also play a critical role in maximizing revenue, as they enable the company to recover costs and provide returns to investors.

American Water Financial Statement Overview

Summary

American Water demonstrates stable financial performance with consistent revenue growth and strong operational margins. However, negative free cash flow indicates potential cash management challenges.

Income Statement

American Water shows a stable revenue growth rate of 2.59% TTM, with consistent gross and net profit margins. The gross profit margin stands at 60.75%, indicating efficient cost management. However, the net profit margin has slightly decreased to 21.93% TTM, suggesting some pressure on profitability. The EBIT and EBITDA margins are healthy, reflecting strong operational performance.

Balance Sheet

The company's debt-to-equity ratio is 1.41 TTM, indicating a moderate level of leverage, which is typical for the industry. Return on equity is stable at 10.48% TTM, showcasing effective use of equity to generate profits. The equity ratio is not explicitly calculated, but the balance sheet reflects a solid equity base supporting asset growth.

Cash Flow

Operating cash flow remains robust, but the free cash flow is negative, indicating high capital expenditures or other cash outflows. The free cash flow to net income ratio is negative, which could be a concern if sustained. The operating cash flow to net income ratio is 0.55 TTM, suggesting that operating cash flow covers net income adequately, but there is room for improvement.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	5.07B	4.68B	4.23B	3.79B	3.93B	3.78B
Gross Profit	3.08B	2.83B	2.51B	2.20B	2.15B	2.15B
EBITDA	2.90B	2.67B	2.36B	2.00B	1.91B	1.93B
Net Income	1.11B	1.05B	944.00M	820.00M	1.26B	709.00M
Balance Sheet
Total Assets	34.75B	32.83B	30.30B	27.79B	26.07B	24.77B
Cash, Cash Equivalents and Short-Term Investments	256.00M	196.00M	330.00M	85.00M	116.00M	547.00M
Total Debt	15.37B	14.11B	12.44B	12.45B	11.06B	11.02B
Total Liabilities	23.84B	22.50B	20.50B	20.09B	18.78B	18.31B
Stockholders Equity	10.91B	10.33B	9.80B	7.69B	7.30B	6.45B
Cash Flow
Free Cash Flow	-977.00M	-811.00M	-860.00M	-1.31B	-432.00M	-502.00M
Operating Cash Flow	2.04B	2.04B	1.87B	1.11B	1.44B	1.43B
Investing Cash Flow	-3.40B	-3.38B	-2.81B	-2.13B	-1.54B	-2.06B
Financing Cash Flow	1.40B	1.11B	1.19B	1.00B	-345.00M	1.12B

American Water Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 129.27
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AWK, the sentiment is Negative. The current price of 129.27 is below the 20-day moving average (MA) of 130.73, below the 50-day MA of 130.04, and below the 200-day MA of 137.92, indicating a bearish trend. The MACD of -0.68 indicates Positive momentum. The RSI at 46.71 is Neutral, neither overbought nor oversold. The STOCH value of 46.91 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AWK.

American Water Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AWK	73 Outperform	$24.84B	22.67	10.46%	2.51%	12.29%	13.13%
SBS	71 Outperform	$16.94B	13.97	16.99%	2.22%	-10.23%	-26.87%
AWR	70 Outperform	$2.81B	21.60	13.73%	2.64%	10.28%	13.56%
WTRG	66 Neutral	$10.76B	15.96	10.29%	3.48%	21.35%	20.96%
Sector *	66 Neutral	$17.65B	18.10	5.60%	3.62%	6.62%	11.55%
CWT	65 Neutral	$2.58B	19.09	8.19%	2.88%	-2.60%	-33.78%
MSEX	59 Neutral	$924.59M	21.40	9.27%	2.67%	6.24%	3.35%

American Water Corporate Events

Kentucky American Water wins approval for higher base rates

On December 16, 2025, the Kentucky Public Service Commission approved new base water rates for Kentucky American Water, granting an annualized revenue increase of about $18.2 million, driven primarily by more than $212 million in water treatment and distribution system capital investments made since the company’s last rate filing, and setting an authorized return on equity of 9.70% on a $667 million rate base. The decision folds the costs and investments from the terminated Qualified Infrastructure Program rider into base rates and will raise the average monthly residential bill for customers using 3,900 gallons by roughly $2, while the company highlights that the rate adjustment supports ongoing infrastructure upgrades, regulatory compliance and service reliability, alongside existing customer assistance programs for payment flexibility and aid to income-eligible households.

The most recent analyst rating on (AWK) stock is a Sell with a $122.00 price target. To see the full list of analyst forecasts on American Water stock, see the AWK Stock Forecast page.

American Water Seeks Rate Hike for Infrastructure Upgrades

On November 14, 2025, Pennsylvania American Water filed a rate request with the Pennsylvania Public Utility Commission to support $1.2 billion in ongoing investments in water and wastewater infrastructure. The request, if approved, would increase rates for residential customers to fund critical upgrades, including replacing aging water and sewer mains and addressing contaminants like PFAS. The proposal also includes a summer wastewater billing adjustment and a pilot assistance program for low-income renters, reflecting the company’s commitment to affordability and service improvement. The new rates, pending approval, are expected to take effect in August 2026.

The most recent analyst rating on (AWK) stock is a Hold with a $124.00 price target. To see the full list of analyst forecasts on American Water stock, see the AWK Stock Forecast page.

American Water Seeks Rate Adjustment in Virginia

On November 3, 2025, Virginia American Water filed a request with the Virginia State Corporation Commission to adjust its water and wastewater rates, seeking an annual revenue increase of $21.9 million. This request is driven by over $115 million in capital investments aimed at infrastructure improvements, including updates to water treatment plants and replacement of aging pipelines, reinforcing the company’s commitment to providing high-quality service. Interim rates are expected to take effect on May 1, 2026, with the final rates subject to approval and potential refund to customers. The rate review process allows for customer involvement through comments and public hearings.

The most recent analyst rating on (AWK) stock is a Hold with a $138.00 price target. To see the full list of analyst forecasts on American Water stock, see the AWK Stock Forecast page.

American Water Reports Strong Q3 Earnings Growth

On October 29, 2025, American Water reported strong third-quarter earnings of $1.94 per share, up from $1.80 per share in 2024, and affirmed its 2025 earnings per share guidance. The company also initiated its 2026 earnings guidance, reflecting an 8% growth, and announced a merger with Essential Utilities expected to close by Q1 2027. The merger aims to enhance the company’s scale and growth potential, benefiting stakeholders by combining complementary businesses. Additionally, American Water outlined its capital investment plans through 2035 and maintained its long-term growth targets.

The most recent analyst rating on (AWK) stock is a Hold with a $142.00 price target. To see the full list of analyst forecasts on American Water stock, see the AWK Stock Forecast page.

American Water Announces Merger with Essential Utilities

On October 26, 2025, American Water Works Company, Inc. and Essential Utilities, Inc. announced an Agreement and Plan of Merger, which will see Essential become a wholly owned subsidiary of American Water. This strategic merger, approved by both companies’ boards, aims to enhance operational efficiency and expand customer service capabilities, with a combined market capitalization of approximately $40 billion. The merger is expected to be accretive to American Water’s earnings per share in the first year and maintain long-term growth targets. The merger will also provide greater long-term growth opportunities for employees and strengthen commitments to community and water affordability.

The most recent analyst rating on (AWK) stock is a Sell with a $134.00 price target. To see the full list of analyst forecasts on American Water stock, see the AWK Stock Forecast page.