American Water Works (AWK) Up 1.9% Since Last Earnings Report: Can It Continue?

Core Viewpoint - American Water Works reported mixed Q2 2025 earnings, with EPS slightly below estimates but revenues exceeding expectations, indicating a need for investors to assess future performance trends [3][4]. Financial Performance - Q2 2025 operating EPS was $1.48, missing the Zacks Consensus Estimate of $1.49 by 0.7%, but improved 4.2% year-over-year from $1.42 [3]. - Total revenues reached $1.27 billion, surpassing the Zacks Consensus Estimate of $1.15 billion by 10.6% and increasing 11% from $1.14 billion in the previous year [4]. - Regulated businesses' net revenues were $1.17 billion, up 11.4% year-over-year, while other revenues were $92 million, up 6.5% [5]. Operating Expenses and Income - Total operating expenses for Q2 were $787 million, a 12.4% increase from $700 million in the prior year, primarily due to higher operating and maintenance costs [6]. - Operating income was $489 million, reflecting an 8.9% increase from $449 million year-over-year [6]. Growth and Expansion - The company added 7,600 customers through seven acquisitions as of June 30, 2025, with 20 more pending acquisitions expected to add 40,650 customers [7]. - New rates effective January 1, 2025, are projected to increase revenues by $270 million for the full year, with pending rate cases potentially adding another $126 million if approved [7]. Financial Position - Cash and cash equivalents were $94 million as of June 30, 2025, slightly down from $96 million at the end of 2024, with total liquidity at $1.17 billion [8]. - Total long-term debt decreased to $12.28 billion, down 1.9% from $12.51 billion at the end of 2024 [8]. Cash Flow and Investment - Cash flow from operating activities in the first half of 2025 was $632 million, compared to $727 million in the same period last year [9]. - The company invested $1.3 billion in the first half of 2025 to enhance its operations [9]. Guidance and Future Plans - American Water Works narrowed its 2025 EPS guidance to $5.70-$5.75, with the Zacks Consensus Estimate at $5.71, slightly below the midpoint of the guidance [11]. - The company reiterated long-term earnings and dividend growth expectations of 7-9% and plans to invest nearly $3.3 billion in 2025 [11]. - Long-term capital expenditure is projected to be between $17-$18 billion for 2025-2029 and $40-$42 billion for 2025-2034 [12]. Analyst Sentiment - Analysts have not made any earnings estimate revisions in the past two months, indicating a period of stability in expectations [13]. - The stock currently holds a subpar Growth Score of D and a Momentum Score of B, with an overall VGM Score of D, placing it in the bottom 40% for value investors [14].