AWK reported 24Q4 EPS of $1.23, up from $0.88 in 23Q4 and above my estimate of $1.13. Operating revenues rose 16.4% to $1.20 billion. Water and wastewater revenues increased 13.8%, with billed water service volumes up 4.4% and estimated average prices up 9.6%. Military and contract services revenues jumped 51%, due to the timing of capital projects. Consolidated operating and maintenance expenses increased 2.5%, mostly due to higher production and customer billing costs, which more than offset declines in other cost categories. Operating income increased 33.8% to $400 million. Net interest costs rose 16.5%. Thus, net income increased 39.8% to $239 million.
Management reaffirmed its 2025 EPS guidance at $5.65-$5.75. Both 2024 and 2025 earnings per share include $0.10 of interest income from a seller note that AWK took back on the sale of its Homeowner Services business. That note matures in December 2026, so the company could lose that income, if the note is refinanced elsewhere.
Based upon AWK’s 24Q4 performance, I have raised my 2025 EPS estimate from $5.70 to $5.74, which is at the high end of management’s guidance range. For 2026, I now project EPS of $6.15, which represents an increase of 7.2%, which is within management’s long-term EPS growth target of 7%-9%.
Since my last report on Nov. 1, AWK’s stock has earned a total return of 3.4%, outperforming the S&P 500, which is down 4.2% and also the Dow Jones Water Utility Index’s 1.3% price rise. The stock has been a safe haven for most of the recent market turmoil, even posting a new 52-week intraday high of $155.50 on April 4, before getting swept up in the steep market slide over the past five trading days. The stock is down again today, despite the market’s sharp rebound (on President Trump’s 90-day pause in implementing the tariffs).
Based upon the company’s financial performance and my projections, I am maintaining my price target of $152 for AWK’s stock. The price target implies a forward valuation multiple of 24.7 times projected 2026 EPS of $6.15, modestly above its current near-term forward multiple of 24.2 and above the peer group average of 21. Along with its 2.2% dividend yield, the potential total return is 11.6%. Accordingly, I am maintaining my performance rating of “2” (Outperform).
This is a summary of an update report by Lark Research on American Water Works Company (AWK). To obtain a copy of the report, please reach out to me using the contact information provided below.
June 20, 2025 (Report published on April 9, 2025.)
Stephen P. Percoco
Lark Research
839 Dewitt Street
Linden, New Jersey 07036
(908) 975-0250
admin@larkresearch.com
© 2015-2025 by Stephen P. Percoco, Lark Research. All rights reserved.
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