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Reasons to Add American Water Works (AWK) to Your Portfolio Now
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American Water Works Company Inc.’s (AWK - Free Report) ongoing investments 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 Zacks Rank #2 (Buy) stock a strong investment option at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for 2023 earnings per share (EPS) has moved up 0.4% in the past 90 days to 4.81.
The Zacks Consensus Estimate for 2023 revenues is pinned at $4.13 billion, implying a year-over-year increase of 9%.
AWK’s long-term (three to five years) earnings growth is 8.18%. 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 9.58%. 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, much better than the sector’s average of 56.85.
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 2.17%, better than the Zacks S&P 500 Composite’s 1.42%.
Systematic Investments
American Water Works aims to invest $2.9 billion in 2023 to strengthen and expand its water and wastewater infrastructure. In 2024, the company aims to invest $3.1 billion, 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 in the 2024-2028 period and in the band of $34-$38 billion during 2024-2033.
Price Performance
In the past month, the stock has returned 11.9% compared with the industry’s average 10.8% growth.
GWRS’ long-term earnings growth is 15%. The company delivered an average earnings surprise of 27.1% in the last four quarters.
The Zacks Consensus Estimate for YORW’s 2023 EPS is pegged at $1.59, implying a year-over-year improvement of 13.6%. The company delivered an average earnings surprise of 6.7% in the last four quarters.
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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Reasons to Add American Water Works (AWK) to Your Portfolio Now
American Water Works Company Inc.’s (AWK - Free Report) ongoing investments 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 Zacks Rank #2 (Buy) stock a strong investment option at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for 2023 earnings per share (EPS) has moved up 0.4% in the past 90 days to 4.81.
The Zacks Consensus Estimate for 2023 revenues is pinned at $4.13 billion, implying a year-over-year increase of 9%.
AWK’s long-term (three to five years) earnings growth is 8.18%. 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 9.58%. 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, much better than the sector’s average of 56.85.
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 2.17%, better than the Zacks S&P 500 Composite’s 1.42%.
Systematic Investments
American Water Works aims to invest $2.9 billion in 2023 to strengthen and expand its water and wastewater infrastructure. In 2024, the company aims to invest $3.1 billion, 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 in the 2024-2028 period and in the band of $34-$38 billion during 2024-2033.
Price Performance
In the past month, the stock has returned 11.9% compared with the industry’s average 10.8% growth.
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Other Stocks to Consider
A few other top-ranked stocks from the same industry are Global Water Resources (GWRS - Free Report) , The York Water Company (YORW - 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.
GWRS’ long-term earnings growth is 15%. The company delivered an average earnings surprise of 27.1% in the last four quarters.
The Zacks Consensus Estimate for YORW’s 2023 EPS is pegged at $1.59, implying a year-over-year improvement of 13.6%. The company delivered an average earnings surprise of 6.7% in the last four quarters.
CWCO’s long-term earnings growth rate is 8%. The company delivered an average earnings surprise of 61.6% in the last four quarters.