Valued at a market cap of $24.4 billion, American Water Works Company, Inc. (AWK) provides water and wastewater services. The Camden, New Jersey-based company operates various water treatment plants, groundwater treatment plants, wastewater treatment plants, groundwater wells, and water and wastewater pumping stations.
This water treatment company has lagged behind the broader market over the past 52 weeks. Shares of AWK have gained 1.6% over this time frame, while the broader S&P 500 Index ($SPX) has soared 14.4%. Moreover, on a YTD basis, the stock is down 4.2%, compared to SPX’s 1.4% return.
Narrowing the focus, AWK has also underperformed the Invesco Global Water ETF (PIO), which soared 17.9% over the past 52 weeks and 8.6% on a YTD basis.
Despite delivering stronger-than-expected Q3 earnings results on Oct. 29, AWK shares tumbled 2.6% in the subsequent trading session. The company’s operating revenue of $1.5 billion increased 9.7% year-over-year, surpassing consensus estimates by a notable margin of 9.8%. Moreover, its EPS grew 7.8% from the year-ago quarter to $1.94, topping analyst expectations by 2.1%. However, investors might be concerned about rising costs and leverage, with operating expenses advancing 7.3% from the same period last year to $837 million and total long-term debt increasing 4% to $13 billion.
For the current fiscal year, ending in December, analysts expect AWK’s EPS to grow 6.3% year over year to $5.73. The company’s earnings surprise history is mixed. It exceeded the consensus estimates in three of the last four quarters, while missing on another occasion.
Among the 13 analysts covering the stock, the consensus rating is a "Hold,” which is based on two “Strong Buy,” 10 “Hold,” and one “Strong Sell” ratings.
The configuration is less bullish than a month ago, with three analysts suggesting a “Strong Buy” rating.
On Jan. 22, Nicholas Campanella from Barclays PLC (BCS) maintained a “Sell" rating on AWK, with a price target of $122.
The mean price target of $141.50 represents a 13.8% premium to its current price, while its Street-high price target of $160 suggests a 28.7% potential upside from the current levels.
On the date of publication, Neharika Jain did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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