Company Overview - American Water Works (AWK) is one of 104 companies in the Utilities group, currently ranked 5 within the Zacks Sector Rank [2] - The company has a Zacks Rank of 2 (Buy), indicating a favorable outlook based on earnings estimate revisions [3] Performance Analysis - Over the past three months, the Zacks Consensus Estimate for AWK's full-year earnings has increased by 0.3%, reflecting improving analyst sentiment [4] - AWK has returned 6.6% year-to-date, outperforming the average return of 4.6% for Utilities companies [4] - In comparison, AWK is slightly underperforming its industry, the Utility - Water Supply, which has gained an average of 6.7% so far this year [6] Industry Context - The Utility - Water Supply industry, which includes 12 stocks, is currently ranked 88 in the Zacks Industry Rank [6] - Another stock in the Utilities sector, NRG Energy (NRG), has shown a year-to-date return of 17.5% and has a Zacks Rank of 1 (Strong Buy) [5][7] - The Utility - Electric Power industry, to which NRG belongs, is ranked 86 and has moved up by 4.5% this year [7]

Financial Data and Key Metrics Changes - Consolidated reported earnings were $5.39 per share in 2024, an increase of $0.49 per share compared to 2023, reflecting an 8% EPS growth [25][26][19] - Earnings in 2024 benefited from $0.12 per share due to favorable weather and $0.09 per share from incremental interest income [16][25] - Operating costs increased by $0.22 per share, primarily due to employee-related costs and other growth-related expenses [26] Business Line Data and Key Metrics Changes - The company invested over $3 billion in 2024 to support infrastructure investments and customer service [17][18] - Nearly 70,000 customer connections were added through acquisitions, meeting the 2% compounded annual growth target [18][51] Market Data and Key Metrics Changes - The company operates across 14 states, benefiting from regulatory diversity and a low-risk business model [20][38] - The average residential water bill is expected to remain at or below 1% of median household income throughout the ten-year plan [50] Company Strategy and Development Direction - The company is focused on a capital investment program aimed at infrastructure renewal, with a long-term rate base growth target of 8% to 9% [20][49] - The company plans to achieve consistent EPS growth within the 7% to 9% range through 2029 and beyond [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in executing plans for 2025 and beyond, emphasizing the importance of addressing aging infrastructure and water quality challenges [22][22] - The company remains committed to providing safe, clean, and reliable services while maintaining affordability for customers [55][50] Other Important Information - Susan Hardwick announced her retirement effective May 14, 2025, with John Griffith set to succeed her as CEO [7][8] - The company has a strong balance sheet with a total debt to capital ratio of 57%, well within the target of less than 60% [38] Q&A Session Summary Question: Changes in strategy regarding PFAS investments - Management confirmed no changes to capital plans related to PFAS, emphasizing the need to meet regulatory requirements [63] Question: Should the $0.10 from loan remarketing be included in EPS growth models? - Management advised to exclude the $0.10 from the base EPS growth calculations [65] Question: Details on acquisition capabilities and growth - Management highlighted the addition of staffing in business development to enhance growth across multiple states [72][74] Question: Disruptions in procurement for capital projects - Management reported no disruptions in procurement, maintaining a robust supply chain for capital investments [84] Question: Update on the Missouri rate case - Management expressed optimism about reaching a settlement prior to the start of hearings in Missouri [94] Question: Impact of economic development on customer growth - Management noted that while there are opportunities for growth, water demand remains stable with excess capacity in the industry [98] Question: Consideration of hybrid financing options - Management indicated that hybrids are not seen as cost-effective compared to traditional equity financing [105] Question: Update on Missouri legislative efforts - Management is actively working to improve the regulatory environment in Missouri, focusing on future test year legislation [128]

Core Insights - American Water Works Company (AWK) reported fourth-quarter 2024 operating earnings per share (EPS) of $1.22, exceeding the Zacks Consensus Estimate of $1.13 by 7.9% and showing a year-over-year increase of 38.6% from $0.88 [1][2] - Total revenues for the fourth quarter reached $1.2 billion, surpassing the Zacks Consensus Estimate of $1.08 billion by 11.4% and increasing 16.4% from $1.03 billion in the previous year [3] - The company continues to expand operations, adding 90,000 customers in 2024, with 69,500 from 13 acquisitions, and has 17 pending acquisitions expected to add another 24,200 customers [6] Financial Performance - Total operating expenses for Q4 were $801 million, a 9.3% increase from $733 million in the previous year, primarily due to higher operating and maintenance costs [5] - Operating income for the fourth quarter was $400 million, up 33.8% from $299 million year-over-year, exceeding predictions [5] - Net income for Q4 was $239 million, compared to $171 million in the same quarter last year [7] Revenue Breakdown - Regulated businesses' net revenues in 2024 were $4.3 billion, reflecting a 9.6% year-over-year increase [4] - Other net revenues in 2024 amounted to $380 million, up from $310 million in 2023 [4] Long-Term Guidance - The company reiterated its 2025 EPS guidance of $5.65-$5.75, aligning with the Zacks Consensus Estimate of $5.70 [10] - Long-term earnings and dividend growth are projected in the range of 7-9%, with planned investments of nearly $3.3 billion in 2025 [10] - Capital expenditure for 2025-2029 is expected to be between $17-$18 billion, and for 2025-2034, it is projected to be in the range of $40-$42 billion [11]

American Water Works (AWK) came out with quarterly earnings of $1.22 per share, beating the Zacks Consensus Estimate of $1.13 per share. This compares to earnings of $0.88 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 7.96%. A quarter ago, it was expected that this water utility would post earnings of $1.84 per share when it actually produced earnings of $1.80, delivering a surprise of -2.17%.Over the last four quarters, the ...

Financial Performance - American Water reported Q4 2024 earnings of $1.22 per share, up from $0.88 per share in Q4 2023, and full-year earnings of $5.39 per share compared to $4.90 per share in 2023, reflecting an 8.6% year-over-year increase when excluding certain interest income[3][6] - Operating revenues increased by $132 million and $376 million for Q4 and full-year 2024, respectively, primarily due to authorized revenue increases from completed general rate cases[10] - The Regulated Businesses' net income for Q4 2024 was $250 million, compared to $188 million in Q4 2023, and full-year net income was $1.1 billion, up from $971 million in 2023[9] - Net income attributable to common shareholders for Q4 2024 was $239 million, a 39.9% increase from $171 million in Q4 2023[29] - Basic earnings per share for Q4 2024 were $1.22, compared to $0.88 in Q4 2023, reflecting a 38.6% increase[29] - The company reported a total operating income of $400 million for Q4 2024, up 33.8% from $299 million in Q4 2023[29] Revenue and Investment - The company invested $3.3 billion in capital in 2024, focusing on infrastructure renewal and completing 13 acquisitions that added nearly 70,000 customers, achieving a 2% annual growth target[4][8] - The company has been authorized additional annualized revenues of approximately $389 million from general rate cases, with $283 million effective in 2024 and $106 million effective in 2025[11] - Operating revenues for Q4 2024 were $1,201 million, up 16.4% from $1,032 million in Q4 2023[29] Expenses and Liabilities - Operating expenses increased by $30 million and $169 million for Q4 and full-year 2024, respectively, primarily due to higher employee-related costs and increased production costs[12] - Total operating expenses for Q4 2024 were $801 million, an increase of 9.3% from $733 million in Q4 2023[29] - Current liabilities increased significantly to $3,150 million in December 2024, up from $2,151 million in December 2023, marking an increase of 46.4%[31] - Long-term debt rose to $12,518 million in December 2024, compared to $11,715 million in December 2023, reflecting an increase of 6.9%[31] Shareholder Returns - American Water delivered an 8.1% dividend growth for the year, with a quarterly cash dividend of $0.7650 per share declared for March 2025[14] - The company affirmed its 2025 EPS guidance range of $5.65 to $5.75, which includes approximately $0.10 per share of incremental interest income[6] - American Water's long-term financial targets include an EPS and dividend growth rate of 7-9%[6] Leadership and Strategy - CEO M. Susan Hardwick will retire on May 14, 2025, with John Griffith set to succeed her, continuing the company's leadership in the water utility sector[15][17] - The company anticipates continued growth through strategic acquisitions and capital expenditures, although specific projections were not detailed[25] - The company is focused on enhancing its infrastructure and technology to improve operational efficiency and service delivery[25] Asset and Equity Growth - Property, plant, and equipment increased to $35,059 million as of December 31, 2024, from $32,189 million a year earlier[30] - Total assets rose to $32,830 million as of December 31, 2024, compared to $30,298 million as of December 31, 2023[30] - Total common shareholders' equity increased to $10,332 million in December 2024, up from $9,797 million in December 2023, representing a growth of 5.5%[31] - Retained earnings increased to $2,112 million in December 2024, up from $1,659 million in December 2023, showing a growth of 27.2%[31] - Total capitalization grew to $22,853 million in December 2024, compared to $21,515 million in December 2023, indicating a rise of 6.2%[31] Regulatory and Construction Contributions - Accrued taxes rose to $156 million in December 2024, compared to $67 million in December 2023, which is an increase of 132.8%[31] - Advances for construction increased to $383 million in December 2024, compared to $352 million in December 2023, reflecting an increase of 8.8%[31] - Contributions in aid of construction rose to $1,577 million in December 2024, up from $1,551 million in December 2023, indicating an increase of 1.7%[31] - Regulatory liabilities decreased slightly to $1,416 million in December 2024 from $1,481 million in December 2023, a decline of 4.4%[31]

Liquidity and Debt Management - The company relies on a $2.75 billion revolving credit facility and a $2.60 billion commercial paper program to meet liquidity needs[183]. - As of December 31, 2024, the company had $880 million of commercial paper outstanding and $82 million in outstanding letters of credit[183]. - The company’s consolidated debt cannot exceed 70% of its consolidated capitalization under the terms of its revolving credit facility[186]. - The company plans to issue a combination of short-term and long-term debt, as well as additional equity over the next five years to meet capital expenditure needs[187]. - In June 2023, American Water Capital Corp. issued $1,035 million of 3.625% Exchangeable Senior Notes due 2026, which may adversely affect liquidity if the conditional exchange feature is triggered[188]. Financial Risks - The company is exposed to interest rate risk due to its long-term debt strategy, which may affect financial condition and cash flows[181]. - The company may need to refinance existing debt or reduce capital investments if cash flows are insufficient to meet obligations[182]. - The company’s financial performance is influenced by external factors such as economic conditions and interest rate fluctuations[18]. - Market volatility may increase funding requirements for pension and postretirement benefit plans, affecting financial position and cash flows[193]. - Changes in accounting standards could materially impact how the company reports its financial results and condition[197]. Regulatory and Compliance Risks - The company faces risks related to regulatory decisions that could impact customer rates and capital investment[13]. - The company must comply with evolving environmental regulations, which may impact operational costs and strategies[15]. - The company’s operations are subject to risks associated with contracts with the U.S. government, including potential early termination and compliance issues[196]. Operational and Market Risks - The company is subject to various risks including changes in customer demand and limitations on water supply availability[13]. - The company’s ability to achieve operational growth projections is contingent on successful acquisitions and integration of regulated operations[15]. - The company faces risks related to employee misconduct, which could result in substantial liability and reputational harm[200]. - The company may face challenges in attracting and retaining skilled employees, which could adversely impact business operations and financial results[199]. Financial Condition and Commitments - As of December 31, 2024, the company had $1.1 billion of goodwill and $218 million of total assets measured at fair value, which may require future impairments affecting financial condition[192]. - The company has approximately $8.1 billion in remaining performance commitments related to contracts, with $1.2 billion guaranteed by the parent company, which may impact financial condition[194]. - The company’s ability to pay dividends is dependent on subsidiaries' ability to pay upstream dividends, which may be restricted by regulatory obligations[189].

American Water Works (AWK) is scheduled to release fourth-quarter 2024 results on Feb. 19, after market close. The company delivered a negative earnings surprise of 2.2% in the last reported quarter.See the Zacks Earnings Calendar to stay ahead of market-making news.Let’s discuss the factors that are likely to be reflected in the upcoming quarterly results.Major Factors That Might Have Impacted AWK's Q4 PerformanceIn October 2024, Pennsylvania American Water, a subsidiary of American Water Works, completed ...

American Water Works (AWK) shares ended the last trading session 6.8% higher at $129.95. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 2.9% loss over the past four weeks.American Water Works has been investing regularly to upgrade and maintain its water and wastewater infrastructure. The company plans to invest $3.3 billion in 2025 to strengthen and expand its water and wastewater infrastructure and efficiently s ...

Donald Trump’s first week in the White House sent stocks on a rally after making a shaky start to the New Year. However, concerns over the economy continue to cloud investors’ sentiment related to high inflation and uncertainty over the Federal Reserve’s future rate cut plans. This saw consumer sentiment decline in January, the first time in six months.Given the ongoing uncertainty, it would be safe to invest in utility stocks, which are considered defensive, such as American Water Works Company, Inc. (AWK) ...

American Water Works Company Inc. (AWK) continues to expand operations through organic and inorganic initiatives. Rising earnings estimates, long-term investment plans and growth opportunities make AWK a solid investment option in the utility sector.Let us focus on the factors that make this Zacks Rank #2 (Buy) company a strong investment pick at the moment.AWK’s Earnings Projections & Growth RateThe Zacks Consensus Estimate for 2025 earnings per share (EPS) has moved up 0.2% in the past 90 days to $5.70.Th ...