American Water Works Company Inc.’s (AWK - Free Report) strategic investment plans in infrastructure will allow it to provide quality services to its expanding customer base. Given its growth opportunities, AWK makes for a solid investment option in the utility sector.
Let’s focus on the factors that make this currently Zacks Rank #2 (Buy) stock a strong investment option at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for 2024 earnings per share (EPS) has moved up 0.9% in the past 90 days to $5.17.
The Zacks Consensus Estimate for 2024 revenues is pinned at $4.24 billion, implying a year-over-year increase of 1.9%.
AWK’s long-term (three to five years) earnings growth rate is 7.76%. The company delivered an average earnings surprise of 6.5% in the last four quarters.
Return on Equity
Return on equity (ROE) indicates how efficiently a company has been utilizing the funds to generate higher returns. Currently, American Water Works’ ROE is 9.99%, higher than the sector’s average of 7.39%. This indicates that the company has been utilizing the funds more constructively than its peers in the utility sector.
Debt Position
At the end of third-quarter 2023, AWK’s total debt to capital was 55.2%, better than the sector’s average of 59.31%.
The time to interest earned ratio at the end of third-quarter 2023 was 3.5. The ratio, being greater than one, reflects American Water Works’ ability to meet future interest obligations without difficulties.
Dividend History
The company has been consistently paying dividends to its shareholders. Its board of directors raised its dividend rate by 10% on an annual basis for six consecutive years. Currently, its quarterly dividend is 70.75 cents per share, resulting in an annualized dividend of $2.83 per share. AWK’s current dividend yield is 2.14%, better than the Zacks S&P 500 Composite’s 1.37%.
Systematic Investments
American Water Works aims to invest $3.1 billion in 2024, with a major portion utilized for infrastructure improvements in Regulated Businesses. Over the long-term, AWK aims to invest in the range of $16-$17 billion during 2024-2028 and in the band of $34-$38 billion during 2024-2033.
Price Performance
In the past three months, American Water Works has returned 9.9% compared with the sector’s 7.3% growth.
Other Stocks to Consider
A few other top-ranked stocks from the same industry are California Water Service Group (CWT - Free Report) , Essential Utilities Inc. (WTRG - Free Report) and Consolidated Water Co. Ltd. (CWCO - Free Report) , each holding a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for CWT’s 2024 EPS is pegged at $2.25, implying a year-over-year improvement of 17.8%. The Zacks Consensus Estimate for 2024 sales implies a year-over-year increase of 3.2%.
WTRG’s long-term earnings growth rate is 5.6%. The Zacks Consensus Estimate for WTRG’s 2024 EPS is pegged at $2.00, implying year-over-year growth of 7.4%.
CWCO’s long-term earnings growth rate is 8%. The company delivered an average earnings surprise of 61.6% in the last four quarters.
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American Water Works Company Inc.’s (AWK - Free Report) strategic investment plans in infrastructure will allow it to provide quality services to its expanding customer base. Given its growth opportunities, AWK makes for a solid investment option in the utility sector.
Let’s focus on the factors that make this currently Zacks Rank #2 (Buy) stock a strong investment option at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for 2024 earnings per share (EPS) has moved up 0.9% in the past 90 days to $5.17.
The Zacks Consensus Estimate for 2024 revenues is pinned at $4.24 billion, implying a year-over-year increase of 1.9%.
AWK’s long-term (three to five years) earnings growth rate is 7.76%. The company delivered an average earnings surprise of 6.5% in the last four quarters.
Return on Equity
Return on equity (ROE) indicates how efficiently a company has been utilizing the funds to generate higher returns. Currently, American Water Works’ ROE is 9.99%, higher than the sector’s average of 7.39%. This indicates that the company has been utilizing the funds more constructively than its peers in the utility sector.
Debt Position
At the end of third-quarter 2023, AWK’s total debt to capital was 55.2%, better than the sector’s average of 59.31%.
The time to interest earned ratio at the end of third-quarter 2023 was 3.5. The ratio, being greater than one, reflects American Water Works’ ability to meet future interest obligations without difficulties.
Dividend History
The company has been consistently paying dividends to its shareholders. Its board of directors raised its dividend rate by 10% on an annual basis for six consecutive years. Currently, its quarterly dividend is 70.75 cents per share, resulting in an annualized dividend of $2.83 per share. AWK’s current dividend yield is 2.14%, better than the Zacks S&P 500 Composite’s 1.37%.
Systematic Investments
American Water Works aims to invest $3.1 billion in 2024, with a major portion utilized for infrastructure improvements in Regulated Businesses. Over the long-term, AWK aims to invest in the range of $16-$17 billion during 2024-2028 and in the band of $34-$38 billion during 2024-2033.
Price Performance
In the past three months, American Water Works has returned 9.9% compared with the sector’s 7.3% growth.
Other Stocks to Consider
A few other top-ranked stocks from the same industry are California Water Service Group (CWT - Free Report) , Essential Utilities Inc. (WTRG - Free Report) and Consolidated Water Co. Ltd. (CWCO - Free Report) , each holding a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for CWT’s 2024 EPS is pegged at $2.25, implying a year-over-year improvement of 17.8%. The Zacks Consensus Estimate for 2024 sales implies a year-over-year increase of 3.2%.
WTRG’s long-term earnings growth rate is 5.6%. The Zacks Consensus Estimate for WTRG’s 2024 EPS is pegged at $2.00, implying year-over-year growth of 7.4%.
CWCO’s long-term earnings growth rate is 8%. The company delivered an average earnings surprise of 61.6% in the last four quarters.
Just Released: Zacks Top 10 Stocks for 2024
Hurry – you can still get in early on our 10 top tickers for 2024. Hand-picked by Zacks Director of Research, Sheraz Mian, this portfolio has been stunningly and consistently successful. From inception in 2012 through November, 2023, the Zacks Top 10 Stocks gained +974.1%, nearly TRIPLING the S&P 500’s +340.1%. Sheraz has combed through 4,400 companies covered by the Zacks Rank and handpicked the best 10 to buy and hold in 2024. You can still be among the first to see these just-released stocks with enormous potential.
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