American Water Works Reports Strong Earnings Amid Rising Costs

Newark, NJ – American Water Works Company, the largest water utility in the United States, announced strong financial results for the second quarter of 2023, despite facing increasing operational costs.

The company reported a revenue of $1.28 billion, exceeding analysts’ expectations, with an earnings per share (EPS) of $1.48, up from $1.42 in the same period last year. Its net income reached $289 million, attributed to recent rate approvals and strategic acquisitions.

However, rising expenses—including employee salaries, technology investments, and depreciation—impacted overall profits. Weather conditions also played a role, contributing to a decrease of $0.06 per share.

Despite the positive financial performance, American Water Works narrowed its full-year EPS guidance to a range of $5.70 to $5.75, reaffirming its growth targets of 7% to 9% annually. Analysts maintained a “hold” rating on the stock, with an average price target just 4.4% above its current market price.

Utilities are generally seen as stable investments, especially in uncertain economic times. While American Water Works has shown consistent growth, the lack of significant analyst upgrades has left investors feeling cautious. The company’s stock trades at 24 times its forward earnings, which is considered high for a utility.

Looking ahead, the utility sector remains essential as America’s infrastructure ages. American Water Works’s commitment to steady earnings and dividend growth appeals to income-focused investors. However, ongoing rate negotiations and rising costs indicate that progress will be slow, underscoring the need for patience among stakeholders.