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American Water Q2 Earnings Top Estimates on Rate Growth & Acquisitions
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Key Takeaways
American Water's adjusted EPS rose 8.1% to $1.61 as revenues climbed 6.2% to $1.36 billion.
Rate increases and acquisitions helped regulated net income rise to $331 million from $288 million.
AWK reaffirmed 2026 EPS guidance of $6.02-$6.12 and its long-term 7-9% earnings growth target.
American Water Works Company Inc. (AWK - Free Report) reported second-quarter 2026 adjusted earnings of $1.61 per share, which beat the Zacks Consensus Estimate of $1.59 by 1.3%. The bottom line increased 8.1% from $1.49 in the year-ago quarter.
Earnings benefited from contributions coming from authorized rate increases, infrastructure investments and acquired operations.
Total Revenues
Revenues of $1.36 billion surpassed the Zacks Consensus Estimate of $1.28 billion by 6.2% and rose 6.2% year over year. The company added nearly 52,000 customer connections through acquisitions in the first half.
Regulated Businesses generated net income of $331 million in the second quarter, up from $288 million a year earlier. Operating revenues in the segment increased $90 million year over year.
The improvement primarily reflected authorized revenue increases from completed general rate cases and infrastructure proceedings. Incremental revenues from closed acquisitions also supported growth. Since the beginning of 2026, American Water has received authorization for $216 million of additional annualized revenues.
American Water Works Company, Inc. Price, Consensus and EPS Surprise
Total operating expenses were $813 million, up 3.3% from $787 million in the prior-year quarter. Operation and maintenance expenses were nearly flat at $481 million compared with $480 million.
General taxes rose 7% to $92 million. Despite cost pressures, operating income advanced 10.8% to $542 million as revenue growth outpaced the increase in expenses.
AWK’s Financing Costs Remain a Headwind
Interest expense increased to $167 million from $151 million a year ago. The increase resulted from additional short and long-term debt used primarily to fund capital investments.
Interest income declined 86.4% to $3 million from $22 million. Total other expenses, net, widened to $137 million from $113 million. Nevertheless, income before taxes rose to $405 million from $376 million, while net income attributable to common shareholders increased to $315 million from $289 million.
American Water Advances Its Investment Plan
The company invested $1.8 billion in infrastructure improvements and growth during the first six months of 2026. This included $346 million directed toward regulated acquisitions.
American Water remains on track to invest approximately $3.7 billion in 2026, including acquisitions. Its long-term plan targets annual rate base growth of 8-9%, supported by infrastructure renewal, water quality projects, resiliency investments and system expansion.
AWK Continues to Expand Through Acquisitions
The company completed the acquisition of Nexus Water Group systems on June 1. The transaction added roughly 46,600 customer connections across 60 systems in eight states.
Additional acquisitions completed through June 30 added 5,700 connections. American Water also had 19 acquisitions under agreement, representing about 56,600 customer connections and $236 million of investment. The acquisition pipeline exceeds 1.5 million customer connections.
American Water Strengthens Its Financial Position
Cash and cash equivalents totaled $191 million as of June 30, 2026, up from $98 million at the end of 2025. Net cash provided by operating activities increased to $907 million in the first half from $632 million in the prior-year period.
Long-term debt rose to $14.04 billion from $12.78 billion at year-end. During June, the company settled 3.4 million shares under forward sale agreements and received $476 million in net proceeds.
AWK Reaffirms Its 2026 Outlook
American Water reaffirmed adjusted earnings guidance of $6.02-$6.12 per share for 2026. The outlook excludes merger-related transaction costs, weather impacts and certain incremental interest income. The Zacks Consensus Estimate for 2026 is currently pegged at $6.09 per share.
Management also maintained its long-term earnings and dividend growth targets of 7-9%. The company expects Pennsylvania and New Jersey revenue increases to support stronger second-half results, with Pennsylvania’s newly authorized rates scheduled to take effect Aug. 13.
American Water Makes Merger Progress
The proposed merger with Essential Utilities continued to advance. Kentucky, Ohio and Virginia have approved the transaction, while the companies reached a settlement in principle in Texas.
Regulatory reviews remain underway in several other states. American Water expects the transaction to close by the end of the first quarter of 2027, subject to the receipt of remaining approvals and satisfaction of customary closing conditions.
American States Water (AWR - Free Report) is slated to report second-quarter 2026 results on Aug 5, after market close. The Zacks Consensus Estimate for AWR’s second-quarter EPS is pegged at 93 cents, implying an increase of 6.9% from the prior-year figure. The company has a dividend yield of 2.29%.
Essential Utilities Inc. (WTRG - Free Report) is scheduled to report its second-quarter 2026 results on Aug 4, after the market opens. The Zacks Consensus Estimate for WTRG’s second-quarter EPS is pegged at 38 cents, on par with the prior-year figure. The company has a dividend yield of 3.37%.
Consolidated Water Co. Ltd (CWCO - Free Report) is set to report its second-quarter 2026 results on Aug 11. The Zacks Consensus Estimate for CWCO’s first-quarter EPS is pegged at 22 cents, implying a decrease of 31.25% from the prior-year figure. The company has a dividend yield of 1.9%.
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American Water Q2 Earnings Top Estimates on Rate Growth & Acquisitions
Key Takeaways
American Water Works Company Inc. (AWK - Free Report) reported second-quarter 2026 adjusted earnings of $1.61 per share, which beat the Zacks Consensus Estimate of $1.59 by 1.3%. The bottom line increased 8.1% from $1.49 in the year-ago quarter.
Earnings benefited from contributions coming from authorized rate increases, infrastructure investments and acquired operations.
Total Revenues
Revenues of $1.36 billion surpassed the Zacks Consensus Estimate of $1.28 billion by 6.2% and rose 6.2% year over year. The company added nearly 52,000 customer connections through acquisitions in the first half.
Regulated Businesses generated net income of $331 million in the second quarter, up from $288 million a year earlier. Operating revenues in the segment increased $90 million year over year.
The improvement primarily reflected authorized revenue increases from completed general rate cases and infrastructure proceedings. Incremental revenues from closed acquisitions also supported growth. Since the beginning of 2026, American Water has received authorization for $216 million of additional annualized revenues.
American Water Works Company, Inc. Price, Consensus and EPS Surprise
American Water Works Company, Inc. price-consensus-eps-surprise-chart | American Water Works Company, Inc. Quote
American Water Faces Higher Operating Costs
Total operating expenses were $813 million, up 3.3% from $787 million in the prior-year quarter. Operation and maintenance expenses were nearly flat at $481 million compared with $480 million.
General taxes rose 7% to $92 million. Despite cost pressures, operating income advanced 10.8% to $542 million as revenue growth outpaced the increase in expenses.
AWK’s Financing Costs Remain a Headwind
Interest expense increased to $167 million from $151 million a year ago. The increase resulted from additional short and long-term debt used primarily to fund capital investments.
Interest income declined 86.4% to $3 million from $22 million. Total other expenses, net, widened to $137 million from $113 million. Nevertheless, income before taxes rose to $405 million from $376 million, while net income attributable to common shareholders increased to $315 million from $289 million.
American Water Advances Its Investment Plan
The company invested $1.8 billion in infrastructure improvements and growth during the first six months of 2026. This included $346 million directed toward regulated acquisitions.
American Water remains on track to invest approximately $3.7 billion in 2026, including acquisitions. Its long-term plan targets annual rate base growth of 8-9%, supported by infrastructure renewal, water quality projects, resiliency investments and system expansion.
AWK Continues to Expand Through Acquisitions
The company completed the acquisition of Nexus Water Group systems on June 1. The transaction added roughly 46,600 customer connections across 60 systems in eight states.
Additional acquisitions completed through June 30 added 5,700 connections. American Water also had 19 acquisitions under agreement, representing about 56,600 customer connections and $236 million of investment. The acquisition pipeline exceeds 1.5 million customer connections.
American Water Strengthens Its Financial Position
Cash and cash equivalents totaled $191 million as of June 30, 2026, up from $98 million at the end of 2025. Net cash provided by operating activities increased to $907 million in the first half from $632 million in the prior-year period.
Long-term debt rose to $14.04 billion from $12.78 billion at year-end. During June, the company settled 3.4 million shares under forward sale agreements and received $476 million in net proceeds.
AWK Reaffirms Its 2026 Outlook
American Water reaffirmed adjusted earnings guidance of $6.02-$6.12 per share for 2026. The outlook excludes merger-related transaction costs, weather impacts and certain incremental interest income. The Zacks Consensus Estimate for 2026 is currently pegged at $6.09 per share.
Management also maintained its long-term earnings and dividend growth targets of 7-9%. The company expects Pennsylvania and New Jersey revenue increases to support stronger second-half results, with Pennsylvania’s newly authorized rates scheduled to take effect Aug. 13.
American Water Makes Merger Progress
The proposed merger with Essential Utilities continued to advance. Kentucky, Ohio and Virginia have approved the transaction, while the companies reached a settlement in principle in Texas.
Regulatory reviews remain underway in several other states. American Water expects the transaction to close by the end of the first quarter of 2027, subject to the receipt of remaining approvals and satisfaction of customary closing conditions.
Zacks Rank of AWK
American Water currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Upcoming Releases
American States Water (AWR - Free Report) is slated to report second-quarter 2026 results on Aug 5, after market close. The Zacks Consensus Estimate for AWR’s second-quarter EPS is pegged at 93 cents, implying an increase of 6.9% from the prior-year figure. The company has a dividend yield of 2.29%.
Essential Utilities Inc. (WTRG - Free Report) is scheduled to report its second-quarter 2026 results on Aug 4, after the market opens. The Zacks Consensus Estimate for WTRG’s second-quarter EPS is pegged at 38 cents, on par with the prior-year figure. The company has a dividend yield of 3.37%.
Consolidated Water Co. Ltd (CWCO - Free Report) is set to report its second-quarter 2026 results on Aug 11. The Zacks Consensus Estimate for CWCO’s first-quarter EPS is pegged at 22 cents, implying a decrease of 31.25% from the prior-year figure. The company has a dividend yield of 1.9%.