American Water (AWK) AI Stock Analysis

• Market Cap: $27.55B
• Dividend Yield: 2.34%
• Average Volume (3M): 1.29M
• Price to Earnings (P/E): 25.7
• Beta (1Y): 0.14
• Revenue Growth: 11.79%
• EPS Growth: 11.69%
• Country: US
• Employees: 6,700
• Sector: Utilities
• Sector Strength: 80
• Industry: Regulated Water
• EPS (TTM): 1.05
• Shares Outstanding: 195,011,610
• 10 Day Avg. Volume: 1,244,568
• 30 Day Avg. Volume: 1,289,552
• PEG Ratio: -0.97
• Price to Book (P/B): 3.61
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -21.14
• Enterprise Value/Market Cap: 1.46
• Enterprise Value/Revenue: 2.18
• Enterprise Value/Gross Profit: 14.83
• Enterprise Value/Ebitda: 3.94
• 1Y Price Target: $144.20
• Price Target Upside: 2.04% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 10

• Rating: 77 Outperform
• Price Target: $160.00 ▲(13.22%Upside)

American Water's overall stock score of 77 reflects its strong financial performance and positive earnings outlook, bolstered by strategic corporate actions. While the company's valuation appears stretched, the dividend yield and regulatory successes offer some compensation. High leverage and increased costs are concerns, but the strategic initiatives and growth prospects remain compelling.

Positive Factors

Acquisition Opportunities

The $315 million transaction with Nexus Water Group would significantly increase AWK's acquisition backlog, tripling it in the process.

Earnings Growth

AWK's investment outlook has several positive attributes including top quartile 8% EPS growth and constructive regulatory jurisdictions with no major rate cases until 4Q'25.

Negative Factors

Regulatory Challenges

The lack of catalysts and potential slowdown in PFAS rule implementation due to complexity of enforcement with tens of thousands of small systems in the U.S.

Valuation Concerns

The analyst maintains an Underperform rating on AWK primarily due to valuation, which is at a 35% premium compared to electric and gas peers.

American Water Business Overview & Revenue Model

Company Description

American Water (AWK) is the largest publicly traded water and wastewater utility company in the United States. It operates in the utilities sector, providing water and wastewater services to residential, commercial, and industrial customers. The company is dedicated to delivering safe, clean, and reliable water services, with a focus on sustainable practices and infrastructure development.

How the Company Makes Money

American Water makes money primarily by providing regulated water and wastewater services to its customers. The company's revenue model is based on charging customers for the delivery and treatment of water and wastewater, with rates that are typically regulated by state public utility commissions. These rates are designed to allow the company to recover its costs and earn a reasonable return on investment. In addition to its regulated operations, American Water also generates revenue through its market-based businesses, which include providing water and wastewater services to military bases, municipalities, and commercial customers. Key factors contributing to its earnings include rate increases approved by regulatory bodies, operational efficiency improvements, and strategic acquisitions that expand its service territories.

American Water Financial Statement Overview

Summary

American Water demonstrates solid financial performance with strong revenue and profit growth. The income statement is robust, with consistent EBIT and EBITDA margins. However, the high leverage indicated by the debt-to-equity ratio and negative free cash flow due to substantial capital expenditures pose potential risks, necessitating careful monitoring.

Income Statement

American Water has shown strong revenue growth of 13.71% from 2024 to TTM (Trailing-Twelve-Months), supported by solid gross and net profit margins of 56.18% and 22.24%, respectively. Consistent EBIT and EBITDA margins indicate good operational efficiency. The company's profitability metrics are robust, reflecting a stable and growing income stream.

Balance Sheet

The balance sheet reflects a stable equity base with an equity ratio of 31.77%. However, the debt-to-equity ratio is high at 1.38, indicating significant leverage. The return on equity (ROE) is strong at 10.16%, showcasing effective use of equity to generate profits despite the high leverage.

Cash Flow

Operating cash flow is strong, with a positive ratio of 1.86 to net income. However, the company has a negative free cash flow due to substantial capital expenditures, indicating high reinvestment in operations. The free cash flow to net income ratio is -0.82, highlighting the need for careful management of cash outflows.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
4.82B	4.68B	4.23B	3.79B	3.93B	3.78B
	Gross Profit
2.71B	2.83B	2.51B	2.20B	2.15B	2.15B
	EBIT
1.76B	1.72B	1.50B	1.27B	1.20B	1.25B
	EBITDA
2.71B	2.67B	2.36B	2.00B	1.91B	1.90B
	Net Income Common Stockholders
1.07B	1.05B	944.00M	820.00M	1.26B	709.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
114.00M	96.00M	330.00M	85.00M	116.00M	547.00M
	Total Assets
33.16B	33.85B	30.30B	27.79B	26.07B	24.77B
	Total Debt
14.51B	14.11B	12.44B	12.45B	11.06B	11.02B
	Net Debt
14.39B	14.01B	12.11B	12.37B	10.95B	10.47B
	Total Liabilities
22.62B	22.50B	20.50B	20.09B	18.78B	18.31B
	Stockholders Equity
10.53B	10.33B	9.80B	7.69B	7.30B	6.45B
Cash Flow		Free Cash Flow
-880.00M	-811.00M	-860.00M	-1.31B	-432.00M	-502.00M
	Operating Cash Flow
1.99B	2.04B	1.87B	1.11B	1.44B	1.43B
	Investing Cash Flow
-3.21B	-3.38B	-2.81B	-2.13B	-1.54B	-2.06B
	Financing Cash Flow
751.00M	1.11B	1.19B	1.00B	-345.00M	1.12B

American Water Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 141.32
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: 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 141.32 is below the 20-day moving average (MA) of 141.71, below the 50-day MA of 143.31, and above the 200-day MA of 136.16, indicating a neutral trend. The MACD of -0.64 indicates Negative momentum. The RSI at 48.88 is Neutral, neither overbought nor oversold. The STOCH value of 60.26 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AWK.

American Water Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AWK	77 Outperform	$27.55B	25.72	10.43%	2.34%	11.79%	11.69%
SBS	76 Outperform	$14.20B	7.69	28.57%	2.62%	26.64%	151.43%
WTRG	75 Outperform	$10.73B	17.17	9.78%	3.42%	16.41%	5.65%
HTO	74 Outperform	$1.83B	17.95	7.49%	3.14%	12.34%	11.78%
AWR	69 Neutral	$3.03B	24.27	13.95%	2.38%	6.79%	5.96%
Sector *	64 Neutral	$8.55B	10.42	4.24%	4.64%	4.05%	-13.04%
CWT	63 Neutral	$2.81B	20.69	8.67%	2.57%	3.83%	-8.75%

American Water Corporate Events

American Water Expands Board with New Director Appointment

On June 9, 2025, American Water Works Company, Inc. announced the appointment of Raffiq Nathoo as an independent director, expanding the board from eight to nine members. Nathoo, with over 30 years of experience in international financial and capital markets, particularly in the energy, power, and utilities sectors, is expected to enhance the board’s capabilities. His appointment is seen as a strategic move to strengthen the company’s governance and operational oversight, potentially impacting its industry positioning positively.

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.

Iowa Utilities Commission Approves Rate Increase for American Water

On May 21, 2025, the Iowa Utilities Commission approved a $12.7 million annualized increase in water and wastewater system revenues for Iowa American Water, following a rate case filed on May 1, 2024. This increase is driven by over $157 million in infrastructure investments aimed at upgrading treatment and distribution systems. Interim rates became effective on May 11, 2024, and the new rates will be finalized after the Iowa Utilities Commission reviews the company’s filing. This adjustment reflects Iowa American Water’s commitment to maintaining compliance with state and federal regulations while ensuring reliable services for its customers.

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.

American Water Announces Acquisition of Nexus Assets

On May 19, 2025, American Water Works Company, Inc. announced an agreement to acquire water and wastewater system assets from Nexus Regulated Utilities, LLC, a subsidiary of Nexus Water Group, Inc., for approximately $315 million. This acquisition, expected to close by August 2026, will expand American Water’s footprint by nearly 47,000 customer connections across eight states, enhancing its growth strategy and operational scale. The transaction requires regulatory approvals and is anticipated to support further growth opportunities and professional development for local employees.

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.

American Water Seeks Rate Adjustment in Kentucky

On May 14, 2025, American Water Works Company held its 2025 Annual Meeting of Shareholders, where eight directors were elected, executive compensation was approved, and PricewaterhouseCoopers LLP was ratified as the company’s independent public accounting firm. Additionally, Kentucky American Water, a subsidiary of American Water, filed a request with the Kentucky Public Service Commission on May 16, 2025, to adjust water rates, driven by over $212 million in capital investments. This request, aimed at maintaining infrastructure and service quality, could impact customer billing and is subject to regulatory approval.

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.

Missouri Approves Rate Increase for American Water

On May 7, 2025, the Missouri Public Service Commission approved a settlement for Missouri American Water‘s general rate case, resulting in a $63 million annualized revenue increase. This decision follows a $1.1 billion investment in infrastructure improvements. The new rates, effective by May 31, 2025, aim to maintain service quality while ensuring affordability for customers.