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American Water
(NYSE:AWK)
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Rating:67Neutral
Price Target:
$150.00
â–²(11.39% Upside)
Action:Reiterated
Date:07/30/26
The score reflects stable regulated utility operating performance and supportive reaffirmed guidance, offset by weaker cash flow quality (persistently negative free cash flow) and meaningful leverage/funding dependence. Technicals are constructive with price above key moving averages, while valuation appears somewhat premium despite a moderate dividend yield.
Positive Factors
Regulated utility business model
American Water's core regulated model produces predictable, contract-like cash flows driven by rate-base recovery and state-authorized ROEs. This structural framework supports stable revenue and operating margins over multi-year horizons and underpins long-term capital planning and dividend visibility.
Negative Factors
Persistently negative free cash flow
Despite improving operating cash flow, heavy ongoing capex keeps free cash flow negative, forcing reliance on external financing. Over months this reduces financial flexibility, increases interest and refinancing needs, and can constrain discretionary spending or require more equity/debt to fund infrastructure and dividends.
Read all positive and negative factors
Positive Factors
Negative Factors
Regulated utility business model
American Water's core regulated model produces predictable, contract-like cash flows driven by rate-base recovery and state-authorized ROEs. This structural framework supports stable revenue and operating margins over multi-year horizons and underpins long-term capital planning and dividend visibility.
Read all positive factors
American Water Key Performance Indicators (KPIs)
Any
Revenue by Segment
Reveals how much revenue each business unit generates, highlighting the company's core strengths and potential areas for growth or vulnerability.
Reveals how much revenue each business unit generates, highlighting the company's core strengths and potential areas for growth or vulnerability.
Data provided by:
The Fly
The FlyAmerican Water (AWK) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$26.81B
Dividend Yield2.52%
Average Volume (3M)2.17M
Price to Earnings (P/E)23.6
Beta (1Y)-0.35
Revenue Growth6.92%
EPS Growth4.00%
CountryUS
Employees7,000
SectorUtilities
Sector Strength65
IndustryRegulated Water
Share Statistics
EPS (TTM)5.78
Shares Outstanding198,728,990
10 Day Avg. Volume1,694,910
30 Day Avg. Volume2,171,629
Financial Highlights & Ratios
PEG Ratio3.98
Price to Book (P/B)2.35
Price to Sales (P/S)4.95
P/FCF Ratio-23.85
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$139.43Price Target Upside3.54% Upside
Rating ConsensusHold
Number of Analyst Covering7
EPS Forecast (FY)6.08
Revenue Forecast (FY)$5.36B
American Water Business Overview & Revenue Model
Company Description
American Water Works Company, Inc. operates across the United States, delivering essential water and wastewater solutions via its various subsidiary companies. Its operations extend to around 1,700 communities situated across 14 states, catering t...
How the Company Makes Money
American Water makes money primarily by operating regulated water and wastewater utilities and earning authorized returns under state utility regulation. Its largest revenue stream comes from charging customers for water and wastewater service bas...
American Water Earnings Call Summary
Earnings Call Date:Jul 29, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Oct 28, 2026
Earnings Call Sentiment Positive
The call conveyed solid operational and financial execution: double-digit initiatives were advanced (capex deployment of $1.8B, EPS growth, acquisitions, financing) and management reaffirmed full-year guidance and long-term targets. Progress on the Essential merger and multiple regulatory approvals are material positives. The principal headwinds are regulatory negotiation outcomes (e.g., Pennsylvania awarding $75M vs. $160M requested), ongoing rate case uncertainty in several states (including a large Missouri filing under a new test-year approach), modest increases in depreciation/financing costs, and leverage/forward-share settlement exposure. On balance, the strengths (EPS growth, strong capex execution, completed financing, acquisition momentum, merger progress and cost control) outweigh the regulatory and financing risks discussed.Positive Updates
Quarterly and Year-to-Date EPS Growth
Adjusted EPS of $1.61 in Q2 2026 vs. $1.49 in Q2 2025 (~8% YoY growth); YTD adjusted EPS $2.62 vs. $2.51 in the first half of 2025 (~4.4% YoY). Management reaffirmed full-year adjusted EPS guidance of $6.02–$6.12 (targeting ~8% EPS growth for 2026).
Negative Updates
Reduced Pennsylvania Revenue Award vs. Request
Pennsylvania final order approved $75 million of annualized revenue increase versus the $160 million originally requested — a notably lower recovery than filed, indicating regulatory negotiation/compromise on requested capital recovery.
Read all updates
Q2-2026 Updates
Positive
Negative
Quarterly and Year-to-Date EPS Growth
Adjusted EPS of $1.61 in Q2 2026 vs. $1.49 in Q2 2025 (~8% YoY growth); YTD adjusted EPS $2.62 vs. $2.51 in the first half of 2025 (~4.4% YoY). Management reaffirmed full-year adjusted EPS guidance of $6.02–$6.12 (targeting ~8% EPS growth for 2026).
Read all positive updates
Company Guidance
Management affirmed full-year 2026 adjusted EPS guidance of $6.02–$6.12 (implying ~8% EPS growth in 2026), noting Q2 adjusted EPS of $1.61 vs $1.49 LY (just over 8% growth) and YTD adjusted EPS of $2.62 vs $2.51; they expect the majority of EPS growth to occur in H2 as revenue increases take effect later in Q3, and they continue to target 7%–9% EPS and dividend growth through 2030 and beyond. Key financial and operational metrics supporting guidance include $1.8 billion of capital invested YTD, a 2% customer growth target, ~57,000 customer connections under agreement totaling $236 million (including ~47,000 from the Nexus deal and ~70 local employees onboarded), total debt-to-capital of 58% as of June 30, a $500 million 4.625% long‑term debt issuance (May 20), and settlement of 3.4 million of ~8 million equity forwards for net proceeds of $476 million (with the remainder expected to settle in Q4). Regulatory actions informing near‑term revenue timing include a Pennsylvania order approving $75 million of annualized revenue (vs $160 million requested) with a 9.55% ROE and 54.2% equity component (new rates effective August 13), a Kentucky filing reflecting $108 million of investments seeking $18 million of additional revenue (interim rates expected December 2026), and a Missouri filing reflecting $1.6 billion of investments seeking $179 million of additional annual revenue (expected June 2027); the company also reiterated the merger with Essential is expected to close by end of Q1 2027 and affirmed confidence that average monthly residential water bills will remain at or below 1% of median household income.American Water Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
64
Positive
Cash Flow
45
Neutral
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 5.28B | 5.14B | 4.68B | 4.23B | 3.79B | 3.93B |
| Gross Profit | 2.49B | 2.23B | 2.83B | 2.51B | 2.20B | 2.15B |
| EBITDA | 2.87B | 2.93B | 2.67B | 2.36B | 2.00B | 1.91B |
| Net Income | 1.13B | 1.11B | 1.05B | 944.00M | 820.00M | 1.26B |
Balance Sheet | ||||||
| Total Assets | 36.45B | 36.52B | 32.83B | 30.30B | 27.79B | 26.07B |
| Cash, Cash Equivalents and Short-Term Investments | 191.00M | 174.00M | 196.00M | 330.00M | 85.00M | 116.00M |
| Total Debt | 16.06B | 15.92B | 14.11B | 12.44B | 12.45B | 11.06B |
| Total Liabilities | 24.79B | 25.69B | 22.50B | 20.50B | 20.09B | 18.78B |
| Stockholders Equity | 11.66B | 10.84B | 10.33B | 9.80B | 7.69B | 7.30B |
Cash Flow | ||||||
| Free Cash Flow | -1.03B | -1.07B | -811.00M | -860.00M | -1.31B | -432.00M |
| Operating Cash Flow | 2.33B | 2.06B | 2.04B | 1.87B | 1.11B | 1.44B |
| Investing Cash Flow | -3.10B | -3.31B | -3.38B | -2.81B | -2.13B | -1.54B |
| Financing Cash Flow | 855.00M | 1.25B | 1.11B | 1.19B | 1.00B | -345.00M |
American Water Technical Analysis
Positive
134.66
Price Trends
130.45
Positive
129.57
Positive
129.10
Positive
Market Momentum
1.27
Negative
59.01
Neutral
72.01
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AWK, the sentiment is Positive. The current price of 134.66 is above the 20-day moving average (MA) of 134.11, above the 50-day MA of 130.45, and above the 200-day MA of 129.10, indicating a bullish trend. The MACD of 1.27 indicates Negative momentum. The RSI at 59.01 is Neutral, neither overbought nor oversold. The STOCH value of 72.01 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AWK.
American Water Risk Analysis
American Water disclosed 58 risk factors in its most recent earnings report. American Water reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
American Water Peers Comparison
UnderperformOutperform
Sector (66)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
69 Neutral | $3.49B | 24.24 | 13.50% | 2.33% | 13.23% | 12.00% | |
67 Neutral | $26.81B | 23.61 | 10.15% | 2.51% | 6.92% | 4.00% | |
66 Neutral | $11.31B | 20.64 | 8.05% | 3.46% | 9.86% | -16.27% | |
66 Neutral | $17.65B | 18.10 | 5.60% | 3.62% | 6.62% | 11.55% | |
65 Neutral | $3.09B | 22.53 | 7.62% | 2.50% | 6.43% | -2.99% | |
65 Neutral | $1.10B | 22.56 | 9.57% | 2.53% | 5.26% | 7.26% | |
63 Neutral | $17.70B | 2.27 | 20.63% | 2.37% | 7.58% | 4.69% |
* Utilities Sector Average
AWK
American Water
136.46
-3.14
-2.25%
AWR
American States Water
88.73
15.34
20.91%
WTRG
Essential Utilities
40.46
2.78
7.38%
CWT
California Water Service
50.19
5.12
11.36%
SBS
Companhia De Saneamento
4.68
0.55
13.40%
MSEX
Middlesex Water Company
58.87
7.24
14.03%
American Water Corporate Events
Business Operations and StrategyRegulatory Filings and Compliance
Pennsylvania American Water Wins Major Rate Approval
Positive
Jul 17, 2026
On July 16, 2026, Pennsylvania American Water announced that the Pennsylvania Public Utility Commission approved its requested rate adjustment, authorizing an annual revenue increase of about $74.9 million. The ruling was tied to the company’...
Business Operations and StrategyRegulatory Filings and Compliance
Missouri American Water Seeks New Rates for Infrastructure
Neutral
Jul 1, 2026
On July 1, 2026, Missouri American Water filed a request with the Missouri Public Service Commission for new water and wastewater rates to support roughly $1.6 billion of infrastructure investments planned and completed between June 2025 and May 2...
Business Operations and StrategyRegulatory Filings and Compliance
American Water reaches partial California rate case settlement
Positive
Jun 9, 2026
On June 8, 2026, California American Water filed a partial settlement in its statewide general rate case with the California Public Utilities Commission’s Public Advocates Office, covering revenue levels for 2027 through 2029 driven by about...
Business Operations and StrategyM&A Transactions
American Water Expands Regulated Footprint with Nexus Acquisition
Positive
Jun 1, 2026
On June 1, 2026, American Water Works Company, Inc. completed a $315 million acquisition of regulated water and wastewater system assets from Nexus Regulated Utilities, LLC in eight states, including Illinois, Indiana, Kentucky, Maryland, New Jers...
Business Operations and StrategyPrivate Placements and Financing
American Water Raises $500 Million Through Senior Notes
Positive
May 20, 2026
On May 18, 2026, American Water Capital Corp., a wholly owned finance subsidiary of American Water Works Company, Inc., agreed to sell $500 million of 4.625% Senior Notes due 2029 underwritten by a syndicate led by major investment banks and suppo...
Business Operations and StrategyExecutive/Board ChangesRegulatory Filings and ComplianceShareholder Meetings
American Water Subsidiary Seeks Higher Kentucky Regulated Rates
Neutral
May 15, 2026
At its May 13, 2026 annual meeting, American Water shareholders elected 10 directors for terms running to the 2027 meeting, backed executive pay on an advisory basis, and ratified PricewaterhouseCoopers as 2026 auditor. Investors also approved ame...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.