Economic Overview - The University of Michigan's Consumer Sentiment Index for mid-March dropped to 57.9, significantly below the consensus estimate of 63.2 and the final reading of 64.7 in February, indicating a decline in consumer confidence [4] - The short-term inflation outlook increased to 4.9% in March from 4.3% in February, the highest since November 2022, while the long-term inflation outlook rose to 3.9% from 3.4%, marking the highest since February 1991 [5] Investment Strategy - Investment in low-beta high-yielding stocks is recommended as a strategy to safeguard portfolios during uncertain market conditions, with the potential for upside if markets recover [6][8] - The utility sector is highlighted for its stability and consistent demand, making it a favorable choice for income-oriented investors [7][8] Company Highlights Ameren Corp. (AEE) - Ameren plans to invest up to $26.3 billion from 2025 to 2029 to enhance customer reliability and transition to cleaner energy sources [11][12] - Expected revenue and earnings growth rates for the current year are 6% and 6.7%, respectively, with a current dividend yield of 2.90% [14] Atmos Energy Corp. (ATO) - Atmos Energy benefits from rising demand for natural gas and has a long-term investment plan to improve pipeline reliability [15] - Expected revenue and earnings growth rates for the current year are 18.2% and 5.1%, respectively, with a current dividend yield of 2.37% [17] American Water Works Co. Inc. (AWK) - American Water Works is expanding through acquisitions and new water rates, with pending acquisitions expected to add 24,200 customers [21] - Expected revenue and earnings growth rates for the current year are 1.1% and 5.9%, respectively, with a current dividend yield of 2.15% [22] Entergy Corp. (ETR) - Entergy plans to invest $37 billion from 2025 to 2028 to modernize its infrastructure and expand renewable capacity [23] - Expected revenue and earnings growth rates for the current year are 5.5% and 6.3%, respectively, with a current dividend yield of 2.90% [25] NiSource Inc. (NI) - NiSource expects to invest $19.4 billion from 2025 to 2029 to modernize infrastructure and aims to retire all coal-generating sources by 2028 [26][27] - Expected revenue and earnings growth rates for the current year are 11.1% and 9.1%, respectively, with a current dividend yield of 2.90% [28]

Company Performance - American Water Works (AWK) has outperformed the Utilities sector with a year-to-date return of approximately 14.5%, compared to the sector average of 2.4% [4] - The Zacks Consensus Estimate for AWK's full-year earnings has increased by 0.3% over the past quarter, indicating improved analyst sentiment and a stronger earnings outlook [3] - AWK belongs to the Utility - Water Supply industry, which has seen an average gain of about 11.9% this year, further highlighting AWK's strong performance within its specific industry [5] Industry Comparison - The Utilities sector, which includes 104 individual stocks, currently holds a Zacks Sector Rank of 7 out of 16 sector groups [2] - Another stock in the Utilities sector, Southwest Gas (SWX), has returned 3.9% year-to-date and also holds a Zacks Rank of 2 (Buy) [4][5] - The Utility - Gas Distribution industry, which includes Southwest Gas, has experienced a decline of -9.4% since the beginning of the year, contrasting with the performance of the Utility - Water Supply industry [6]

Market Overview - The S&P 500 lost 3.1%, the Dow Jones fell about 2.4%, and the Nasdaq Composite retreated 3.5%, marking the worst week for the S&P 500 since September 2024 [1] - The Nasdaq officially entered correction territory, defined as a 10% decline from recent highs [1] Employment Data - Nonfarm payrolls increased by 151,000 in February, falling short of economists' expectations of 170,000, while the unemployment rate rose to 4.1% [2] Trade Policy Impact - Market turmoil was driven by concerns over trade policy, particularly President Trump's tariff announcements, which created uncertainty despite exemptions for goods from Canada and Mexico under the USMCA until April 2 [3] - Glen Smith, CIO at GDS Wealth Management, noted that the market does not favor uncertainty and anticipates continued market volatility until trade uncertainties are resolved [4] Economic Outlook - Treasury Secretary Scott Bessent acknowledged a potential loss of economic momentum but attributed it to a transition from previous policies, assuring that any tariff-related price increase would be a one-time adjustment [5] Winning Stocks in a Down Market - Erie Indemnity (ERIE) saw an 11.1% increase last week, operating in the property/casualty insurance business and ranked in the top 21% of its industry [7] - Jack Henry & Associates (JKHY) increased by 6.8%, providing technology solutions to community banks and ranked in the top 21% of its industry [8] - Charter Communications (CHTR) rose by 6.7%, serving approximately 30.1 million customers in 41 states as the second-largest cable operator in the U.S. [9] - Gilead Sciences (GILD) also increased by 6.7%, known for its drugs for HIV and other diseases, ranked in the top 21% of its industry [10] - American Water Works (AWK) rose by 3.1%, providing essential water services to over 14 million customers and ranked in the top 38% of its sector [11]

Core Viewpoint - American Water Works Company Inc. (AWK) is positioned as a strong investment option in the utility sector due to rising earnings estimates, long-term investment plans, and growth opportunities [1] Earnings Projections & Growth Rate - The Zacks Consensus Estimate for 2025 earnings per share (EPS) has increased by 0.4% to $5.71 over the past 60 days, while the 2026 EPS estimate is $6.13, reflecting a 0.3% increase [2] - AWK's long-term earnings growth rate is projected at 8.3% over the next three to five years [3] Systematic Investments & Rate Hikes - AWK plans to invest $3.3 billion in 2025 to enhance its water and wastewater infrastructure, with total planned investments of $17-$18 billion from 2025-2029 and $40-$42 billion from 2025-2034 [4] - Rate hikes implemented as of January 1, 2024, are expected to add $373 million to annual revenues in 2024, with further increases of $129 million in 2025 and a potential additional $178 million from pending rate cases [5] Dividend History - AWK has a strong track record of increasing shareholder value through dividends, currently paying a quarterly dividend of 76.50 cents per share, equating to an annualized payout of $3.06 [7] - The company anticipates a long-term dividend increase of 7-9%, subject to board approval, with a current dividend yield of 2.22% [7] Solvency - The time-to-interest earned ratio at the end of Q4 2024 was 3.6, indicating AWK's capability to meet future interest obligations comfortably [8] Expansion Through Acquisition & Organic Initiatives - In 2023, AWK added 18,100 customers through 23 acquisitions across eight states, and in 2024, it completed 13 acquisitions, adding 69,500 customers [9] - Pending acquisitions as of January 1, 2025, are expected to add another 24,200 customers, demonstrating the company's commitment to expanding its customer base [10] Price Performance - Over the past year, AWK's stock has increased by 16.7%, outperforming the industry growth of 9.4% [11]

Company Overview - American Water Works (AWK) currently holds a Momentum Style Score of B, indicating a positive outlook based on momentum investing principles [3] - The company has a Zacks Rank of 2 (Buy), suggesting strong potential for outperformance in the market [4] Price Performance - Over the past week, AWK shares have increased by 2.48%, while the Zacks Utility - Water Supply industry has decreased by 0.15% [6] - In a longer time frame, AWK's monthly price change is 11.45%, outperforming the industry's 5.48% [6] - Over the last quarter, AWK shares have risen by 5.84%, and they are up 16.5% over the past year, compared to the S&P 500's performance of -5.43% and 13.83%, respectively [7] Trading Volume - AWK's average 20-day trading volume is 1,583,557 shares, which serves as a bullish indicator when combined with rising stock prices [8] Earnings Outlook - In the past two months, three earnings estimates for AWK have been revised upwards, while none have been lowered, leading to an increase in the consensus estimate from $5.69 to $5.71 [10] - For the next fiscal year, three estimates have moved upwards, with one downward revision noted [10] Conclusion - Given the positive price trends, trading volume, and earnings outlook, AWK is positioned as a strong momentum pick and is recommended for consideration in investment strategies [12]

Core Viewpoint - The article discusses the performance of low-beta stocks during recent market volatility, highlighting The Progressive Corp. (PGR), Sony (SONY), and American Water Works (AWK) as defensive investment options due to their positive earnings outlook and favorable Zacks Ranks [1][16]. Group 1: The Progressive Corp. (PGR) - PGR shares have increased over 20% in 2025, significantly outperforming the S&P 500, driven by strong quarterly results [3]. - The company is expected to achieve 7% EPS growth on 16% higher sales in the current fiscal year [3]. - Net premiums earned, a key revenue driver, grew 20% year-over-year in the latest quarter, indicating strong momentum [4]. - PGR shares yield a modest 0.1% annually, appealing more to growth-focused investors rather than income-focused ones [6]. Group 2: Sony (SONY) - SONY shares have also risen over 20% in 2025, outperforming the market, with positive post-earnings movement despite missing consensus expectations [7]. - The company has upgraded its profit guidance, maintaining a favorable outlook for the current fiscal year, and holds a Zacks Rank 1 (Strong Buy) [7]. - SONY offers a 1.9% annual dividend yield, with a 24% five-year annualized dividend growth rate, making it attractive for income-seeking investors [8]. Group 3: American Water Works (AWK) - AWK shares have gained 13% in 2025, contrasting with a decline in the S&P 500, following strong quarterly results that exceeded EPS and sales expectations [9]. - The company reaffirmed its previous guidance, contributing to a positive outlook [12]. - AWK has a current annual yield of 2.2%, nearly double that of the S&P 500, with an 8.8% five-year annualized dividend growth rate [12].

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]

Core Insights - American Water Works (AWK) reported quarterly earnings of $1.22 per share, exceeding the Zacks Consensus Estimate of $1.13 per share, and up from $0.88 per share a year ago, representing an earnings surprise of 7.96% [1] - The company posted revenues of $1.2 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 11.40%, compared to $1.03 billion in the same quarter last year [2] - The stock has gained approximately 2.2% since the beginning of the year, while the S&P 500 has increased by 4.2% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.06 on revenues of $1.03 billion, and for the current fiscal year, it is $5.70 on revenues of $4.73 billion [7] - The estimate revisions trend for American Water Works is favorable, leading to a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Utility - Water Supply industry is currently in the top 36% of over 250 Zacks industries, suggesting that stocks in the top 50% of Zacks-ranked industries outperform those in the bottom 50% by more than 2 to 1 [8] - SJW, another company in the same industry, is expected to report quarterly earnings of $0.55 per share, reflecting a year-over-year decline of 6.8%, with revenues projected at $175.92 million, up 2.7% from the previous year [9]