We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Can Approved Rate Hikes Drive American Water Works' Long-Term Growth?
Read MoreHide Full Article
Key Takeaways
AWK's New Jersey rate approval is expected to add $68 million in annual revenue starting Sept. 15, 2026.
AWK plans to invest $19-$20 billion through 2030, supporting 8-9% rate-base growth.
AWK had secured $216 million in additional annualized revenues as of June 30, 2026.
American Water Works Company, Inc. (AWK - Free Report) is benefiting from new rates, which support revenue growth. The rate hikes help the regulated company recover investments in replacing aging assets and upgrading infrastructure while strengthening overall operations. AWK currently aims for 7-9% long-term earnings growth through 2030.
Recently, AWK’s unit, New Jersey American Water, received approval from the New Jersey Board of Public Utilities to implement new rates effective Sept. 15, 2026. The new rates are expected to boost annual revenues by $68 million and help fund more than $1.4 billion in ongoing water and wastewater system upgrades, including nearly 120 miles of main replacement or rehabilitation, lead service lines and PFAS treatment projects.
The approved rate plan will increase the average monthly bill by approximately $4 for residential water customers using 5,700 gallons per month, while eligible customers will receive a $9.88 monthly PFAS credit for 12 months.
As of June 30, 2026, American Water had received authorization for $216 million in additional annualized revenues since Jan. 1, including $111 million through general rate cases and $105 million through infrastructure surcharges.
The company expects to invest $3.7 billion in 2026 and $19-$20 billion through 2030 to support 8-9% rate-base growth. Overall, the new rates should support infrastructure spending through stable revenue generation and help AWK meet its long-term earnings growth target.
Utilities Benefit From Rate Revision
Higher utility rates may increase customers’ monthly bills and add to household expenses. At the same time, rate hikes at regular intervals are essential for regulated utilities as they strengthen revenue recovery, support infrastructure investments and provide utilities with better earnings visibility.
California Water Service Group (CWT - Free Report) second-quarter 2026 revenues rose 16.5% year over year to $308.6 million. Implementation of new California rates contributed $15.3 million, while other rate/regulatory changes added another $15.0 million. New rates became effective July 1, 2026.
Essential Utilities (WTRG - Free Report) second-quarter 2026 revenues increased 7.6%, with higher water and wastewater rates contributing about $15.9 million. New Ohio rates became effective July 22, while Texas interim rates started March 9, 2026.
The Zacks Rundown on AWK
AWK’s Earnings Estimates
The Zacks Consensus Estimate for 2026 and 2027 earnings per share indicates an increase of 7.98% and 8.52%, respectively, year over year.
Image Source: Zacks Investment Research
AWK’s Stock Trading at a Premium
AWK is trading at a premium to the industry, with a forward 12-month price-to-earnings ratio of 21.77X versus the industry average of 17.57X.
Image Source: Zacks Investment Research
AWK’s Stock Price Performance
In the past three months, the company’s shares have gained 12.8% compared with the industry’s 7.3% growth.
View the Zacks #1 Rank List
Image: Bigstock
Can Approved Rate Hikes Drive American Water Works' Long-Term Growth?
Key Takeaways
American Water Works Company, Inc. (AWK - Free Report) is benefiting from new rates, which support revenue growth. The rate hikes help the regulated company recover investments in replacing aging assets and upgrading infrastructure while strengthening overall operations. AWK currently aims for 7-9% long-term earnings growth through 2030.
Recently, AWK’s unit, New Jersey American Water, received approval from the New Jersey Board of Public Utilities to implement new rates effective Sept. 15, 2026. The new rates are expected to boost annual revenues by $68 million and help fund more than $1.4 billion in ongoing water and wastewater system upgrades, including nearly 120 miles of main replacement or rehabilitation, lead service lines and PFAS treatment projects.
The approved rate plan will increase the average monthly bill by approximately $4 for residential water customers using 5,700 gallons per month, while eligible customers will receive a $9.88 monthly PFAS credit for 12 months.
As of June 30, 2026, American Water had received authorization for $216 million in additional annualized revenues since Jan. 1, including $111 million through general rate cases and $105 million through infrastructure surcharges.
The company expects to invest $3.7 billion in 2026 and $19-$20 billion through 2030 to support 8-9% rate-base growth. Overall, the new rates should support infrastructure spending through stable revenue generation and help AWK meet its long-term earnings growth target.
Utilities Benefit From Rate Revision
Higher utility rates may increase customers’ monthly bills and add to household expenses. At the same time, rate hikes at regular intervals are essential for regulated utilities as they strengthen revenue recovery, support infrastructure investments and provide utilities with better earnings visibility.
California Water Service Group (CWT - Free Report) second-quarter 2026 revenues rose 16.5% year over year to $308.6 million. Implementation of new California rates contributed $15.3 million, while other rate/regulatory changes added another $15.0 million. New rates became effective July 1, 2026.
Essential Utilities (WTRG - Free Report) second-quarter 2026 revenues increased 7.6%, with higher water and wastewater rates contributing about $15.9 million. New Ohio rates became effective July 22, while Texas interim rates started March 9, 2026.
The Zacks Rundown on AWK
AWK’s Earnings Estimates
The Zacks Consensus Estimate for 2026 and 2027 earnings per share indicates an increase of 7.98% and 8.52%, respectively, year over year.
Image Source: Zacks Investment Research
AWK’s Stock Trading at a Premium
AWK is trading at a premium to the industry, with a forward 12-month price-to-earnings ratio of 21.77X versus the industry average of 17.57X.
Image Source: Zacks Investment Research
AWK’s Stock Price Performance
In the past three months, the company’s shares have gained 12.8% compared with the industry’s 7.3% growth.
Image Source: Zacks Investment Research
AWK’s Zacks Rank
AWK currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.