American Water Works Company, Inc. (AWK) is a leading provider of water and wastewater services with a market cap of $24.4 billion. Based in Camden, New Jersey, the company operates a wide range of water treatment plants, groundwater treatment plants, wastewater treatment plants, groundwater wells, and water and wastewater pumping stations.
Over the past 52 weeks, AWK has underperformed the broader market. While the S&P 500 Index has seen a 14.4% increase, AWK shares have only gained 1.6%. On a year-to-date basis, the stock is down 4.2%, compared to the S&P 500’s 1.4% return. Additionally, AWK has also lagged behind the Invesco Global Water ETF (PIO), which has soared 17.9% over the past 52 weeks and 8.6% year-to-date.
Despite reporting stronger-than-expected Q3 earnings results, AWK shares dropped 2.6% in the subsequent trading session. The company’s operating revenue of $1.5 billion saw a 9.7% year-over-year increase, surpassing consensus estimates by a substantial margin of 9.8%. Additionally, its EPS grew 7.8% to $1.94, beating analyst expectations by 2.1%. However, investors are expressing concerns about rising costs and leverage, with operating expenses up 7.3% to $837 million and total long-term debt increasing 4% to $13 billion.
Analysts expect AWK’s EPS to grow 6.3% year over year to $5.73 for the current fiscal year ending in December. The company’s earnings surprise history is mixed, surpassing consensus estimates in three of the last four quarters. Among the 13 analysts covering the stock, the consensus rating is a “Hold,” with two “Strong Buy,” 10 “Hold,” and one “Strong Sell” ratings.
The current analyst configuration is less bullish than a month ago, with only three analysts suggesting a “Strong Buy” rating. On January 22, Nicholas Campanella from Barclays PLC maintained a “Sell” rating on AWK with a price target of $122.
In conclusion, American Water Works Company, Inc. continues to face challenges in the market despite its strong performance in the water and wastewater services sector. Investors are keeping a close eye on the company’s financials and growth prospects as it navigates through a competitive landscape.
