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American Water
(NYSE:AWK)
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Rating:64Neutral
Price Target:
$148.00
â–²(7.56% Upside)
Action:Reiterated
Date:09/16/26
The score is held back primarily by weak free-cash-flow generation and reliance on external financing despite solid regulated earnings and steady revenue growth. Guidance reaffirmation and supportive execution/regulatory progress from the latest earnings call add confidence to the outlook, while technicals are neutral-to-mildly constructive and valuation appears moderately expensive relative to the company’s utility profile.
Positive Factors
Steady Revenue and Margin Profile
AWK’s regulated utility base has produced durable revenue expansion while maintaining net margins in the low-20% range. This combination indicates recurring demand, pricing supported by regulation, and operating resilience that can sustain earnings growth as infrastructure investments enter the rate base.
Negative Factors
Persistently Negative Free Cash Flow
AWK’s operating cash flow does not cover its substantial capital requirements, leaving free cash flow consistently below zero. This structural funding gap increases dependence on debt and equity markets to finance infrastructure and dividends, reducing financial flexibility during less favorable funding conditions.
Read all positive and negative factors
Positive Factors
Negative Factors
Steady Revenue and Margin Profile
AWK’s regulated utility base has produced durable revenue expansion while maintaining net margins in the low-20% range. This combination indicates recurring demand, pricing supported by regulation, and operating resilience that can sustain earnings growth as infrastructure investments enter the rate base.
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
$26.99B
Dividend Yield2.56%
Average Volume (3M)1.86M
Price to Earnings (P/E)23.3
Beta (1Y)-0.41
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. Volume1,853,702
30 Day Avg. Volume1,862,847
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 Cap1.54
Enterprise Value/Revenue7.87
Enterprise Value/Gross Profit16.68
Enterprise Value/Ebitda14.52
Forecast
1Y Price Target
$139.60Price Target Upside1.45% Upside
Rating ConsensusHold
Number of Analyst Covering6
EPS Forecast (FY)6.09
Revenue Forecast (FY)$5.40B
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
137.60
Price Trends
134.90
Positive
132.54
Positive
130.88
Positive
Market Momentum
0.86
Negative
71.57
Negative
87.32
Negative
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 137.6 is above the 20-day moving average (MA) of 131.21, above the 50-day MA of 134.90, and above the 200-day MA of 130.88, indicating a bullish trend. The MACD of 0.86 indicates Negative momentum. The RSI at 71.57 is Negative, neither overbought nor oversold. The STOCH value of 87.32 is Negative, 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 |
|---|---|---|---|---|---|---|---|
70 Outperform | $22.83B | 2.73 | 18.48% | 2.13% | 9.43% | -22.80% | |
67 Neutral | $3.30B | 22.44 | 13.50% | 2.50% | 13.23% | 12.00% | |
66 Neutral | $11.63B | 20.79 | 8.05% | 3.25% | 9.86% | -16.27% | |
66 Neutral | $17.65B | 18.10 | 5.60% | 3.62% | 6.62% | 11.55% | |
65 Neutral | $1.01B | 20.55 | 9.57% | 2.69% | 5.26% | 7.26% | |
64 Neutral | $26.99B | 23.31 | 10.15% | 2.56% | 6.92% | 4.00% | |
61 Neutral | $2.87B | 20.61 | 7.62% | 2.84% | 6.43% | -2.99% |
* Utilities Sector Average
AWK
American Water
143.23
4.44
3.20%
AWR
American States Water
85.05
10.50
14.09%
WTRG
Essential Utilities
43.30
3.47
8.71%
CWT
California Water Service
47.54
-0.92
-1.90%
SBS
Companhia De Saneamento
6.27
1.64
35.51%
MSEX
Middlesex Water Company
55.80
-2.98
-5.07%
American Water Corporate Events
Business Operations and StrategyPrivate Placements and Financing
American Water Raises $500 Million Through Senior Notes
Positive
Sep 16, 2026
On September 14, 2026, American Water Capital Corp., a finance subsidiary of American Water Works Company, agreed to sell $500 million of 5.550% senior notes due 2033, supported by American Water under an existing support agreement and issued unde...
Business Operations and StrategyRegulatory Filings and Compliance
American Water Wins Approval for New Jersey Rate Increase
Positive
Sep 9, 2026
On Sept. 9, 2026, the New Jersey Board of Public Utilities approved a settlement in New Jersey American Water’s general rate case, authorizing a $68 million annualized increase in water and wastewater revenues effective Sept. 15, 2026, based...
Legal ProceedingsM&A TransactionsRegulatory Filings and Compliance
American Water Receives Interim Order on Essential Utilities Merger
Neutral
Aug 31, 2026
On August 28, 2026, Administrative Law Judges in proceedings before the Pennsylvania Public Utility Commission issued an interim order concerning the proposed merger of Essential Utilities, Inc. into a wholly owned subsidiary of American Water Wor...
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...
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.