American Water (AWK) AI Stock Analysis

• Market Cap: $25.56B
• Dividend Yield: 2.36%
• Average Volume (3M): 1.55M
• Price to Earnings (P/E): 23.0
• Beta (1Y): -0.20
• 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: 195,123,570
• 10 Day Avg. Volume: 2,215,156
• 30 Day Avg. Volume: 1,547,526
• 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: 1.65
• Enterprise Value/Revenue: 8.34
• Enterprise Value/Gross Profit: 13.72
• Enterprise Value/Ebitda: 14.56
• 1Y Price Target: $141.00
• Price Target Upside: 7.77% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 8
• EPS Forecast (FY): 5.73
• Revenue Forecast (FY): $5.03B

• Rating: 65 Neutral
• Price Target: $138.00 ▲(5.47% Upside)

American Water's overall stock score is driven by stable financial performance and positive earnings call sentiment, highlighting strong earnings growth and strategic initiatives. However, technical indicators suggest a bearish trend, and valuation metrics indicate potential overvaluation, which tempers the overall score.

Positive Factors

Revenue Growth

Consistent revenue growth through rate increases and acquisitions indicates a strong market position and effective regulatory strategy.

Strategic Acquisitions

Strategic acquisitions expand customer base and enhance service capabilities, supporting long-term growth and competitive advantage.

Regulatory Execution

Effective regulatory execution ensures stable cash flows and supports sustainable shareholder returns through predictable rate adjustments.

Negative Factors

Negative Free Cash Flow

Persistent negative free cash flow can limit financial flexibility and impact the company's ability to invest in growth opportunities.

Increased Operating Costs

Rising operating costs can pressure profit margins and reduce overall profitability, potentially affecting long-term financial health.

Merger Integration Risks

Mergers can present integration challenges, potentially disrupting operations and diverting management focus from core business activities.

American Water Business Overview & Revenue Model

Company Description

American Water Works Company, Inc. (AWK) is the largest publicly traded water and wastewater utility company in the United States. Founded in 1886 and headquartered in Camden, New Jersey, American Water operates across various segments, including the Regulated Businesses and the Market-Based Businesses. Its core services encompass the provision of drinking water, wastewater treatment, and water-related services to residential, commercial, and industrial customers, serving approximately 14 million people in 24 states and parts of Canada.

How the Company Makes Money

American Water generates revenue primarily through its regulated utility operations, which provide stable and predictable cash flows. The company earns money by charging customers for water and wastewater services, with rates determined by regulatory bodies in the states where it operates. Additionally, American Water has a significant presence in the market-based segment, which includes operations such as water system operations and maintenance for municipalities and private companies, as well as industrial water services. Key revenue streams include residential water bills, wastewater service charges, and fees from industrial and commercial contracts. The company also benefits from infrastructure investments, which allow for rate increases approved by regulators, contributing to growth in revenue. Partnerships with municipalities and private entities further enhance its earnings potential through service contracts and joint ventures in water management and infrastructure projects.

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: 130.84
• 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 130.84 is below the 20-day moving average (MA) of 136.58, below the 50-day MA of 137.85, and below the 200-day MA of 138.88, indicating a bearish trend. The MACD of -3.03 indicates Positive momentum. The RSI at 41.08 is Neutral, neither overbought nor oversold. The STOCH value of 38.02 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
SBS	74 Outperform	$17.41B	8.82	30.12%	2.14%	30.74%	143.94%
WTRG	74 Outperform	$11.23B	16.46	10.29%	3.20%	21.35%	20.96%
AWR	71 Outperform	$2.85B	21.95	13.73%	2.66%	10.28%	13.56%
Sector *	66 Neutral	$17.65B	18.10	5.60%	3.62%	6.62%	11.55%
CWT	66 Neutral	$2.77B	20.33	8.19%	2.57%	-2.60%	-33.78%
AWK	65 Neutral	$25.56B	22.96	10.46%	2.36%	12.29%	13.13%
MSEX	62 Neutral	$973.19M	22.28	9.27%	2.25%	6.24%	3.35%

American Water Corporate Events

Potential Risks and Challenges for American Water Works Post-Merger: A Financial Outlook

The financial condition, results of operations, and cash flows of the combined company, American Water Works, could face significant risks due to unforeseen events or conditions arising before the merger’s completion. These risks include potential adverse changes in business or operations stemming from actions by either party involved in the merger or from legal and regulatory developments. Such developments could include the emergence of pre-acquisition loss contingencies or unfavorable economic conditions. A notable decline in the value of Essential’s assets or an increase in its liabilities could further impact the future business and financial prospects of the merged entity.

American Water Works Reports Strong Q3 2025 Results

American Water Works Company, Inc. is the largest regulated water and wastewater utility company in the United States, providing essential services to over 14 million people across 14 states and 18 military installations.

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.

American Water Expands Board with New Director Appointment

On August 26, 2025, American Water Works Company, Inc. appointed Lisa A. Grow as an independent director to its board, expanding the board from nine to ten members. Ms. Grow, who brings nearly four decades of experience in the utility industry, is expected to enhance the board’s expertise with her regulatory, customer, and operational knowledge. Her appointment reflects American Water’s strategic focus on strengthening its leadership to benefit its operations and stakeholders.

The most recent analyst rating on (AWK) stock is a Buy with a $160.00 price target. To see the full list of analyst forecasts on American Water stock, see the AWK Stock Forecast page.

American Water Enters New Forward Sale Agreements

On August 7, 2025, American Water Works Company, Inc. entered into additional forward sale agreements with several banks for the sale of over 1 million shares of its common stock, following a previous underwriting agreement for a larger public offering. This move was part of a broader financial strategy, including the issuance of $900 million in senior notes by its subsidiary, American Water Capital Corp., to support its regulated business segment, repay obligations, and fund general corporate purposes.

The most recent analyst rating on (AWK) stock is a Hold with a $147.00 price target. To see the full list of analyst forecasts on American Water stock, see the AWK Stock Forecast page.

American Water Finalizes Forward Sale Agreements

On August 4, 2025, American Water Works Company, Inc. entered into forward sale agreements with Wells Fargo, JPMorgan Chase, and Mizuho Markets for over 7 million shares of its common stock. This move, finalized on August 6, 2025, involved an underwriting agreement allowing the sale of these shares to underwriters, with an option for additional shares. The transaction is part of a registered public offering under the Securities Act of 1933, potentially impacting American Water’s financial operations and market positioning.

The most recent analyst rating on (AWK) stock is a Buy with a $164.00 price target. To see the full list of analyst forecasts on American Water stock, see the AWK Stock Forecast page.