Why Is American Water Works (AWK) Up 2.5% Since Last Earnings Report?

A month has gone by since the last earnings report for American Water Works (AWK). Shares have added about 2.5% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is American Water Works due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.American Water Works Q3 Earnings Beat Estimates, Revenues Up Y/YAmerican Water Works Company reported third-quarter 2025 earnings per share (EPS) of $1.94, which beat the Zacks Consensus Estimate of $1.90 by 2.1%.The bottom line improved 7.8% from the year-ago quarter's level of $1.80, driven by higher year-over-year revenues and operating income growth.    Total Revenues of American Water American Water’s total quarterly revenues of $1.45 billion surpassed the Zacks Consensus Estimate of $1.32 billion by 19.6%. The top line also increased 9.8% from the year-ago figure of $1.32 billion, driven by the implementation of new rates in the Regulated Businesses from the recovery of capital and acquisition investments.American Water’s Segmental DetailsRegulated businesses’ net revenues were $1.34 billion, up 10.2% year over year.Others’ net revenues were $108 million, up 3.8% year over year.Highlights of American Water’s Q3 ReleaseTotal operating expenses for the third quarter were $837 million, up 7.3% from the year-ago quarter’s $780 million, on account of an increase in employee-related costs and technology-related costs, as well as general taxes associated with increased capital investment, and other operation and maintenance costs related to acquisitions closed in 2024.The operating income totaled $614 million, up 13.1% from the year-ago figure of $543 million.The company entered into equity forward sale agreements in August 2025, with expectations to draw down total net proceeds of approximately $1.15 billion in mid-2026.Financial Highlights of American Water Cash and cash equivalents amounted to $166 million as of Sept. 30, 2025, compared with $96 million as of Dec. 31, 2024.Total long-term debt was $13.02 billion as of Sept. 30, 2025, up 4% from $12.51 billion as of Dec. 31, 2024.For the nine months of 2025, AWK’s cash flow from operating activities amounted to $1.40 billion as of Sept. 30, 2025, compared with $1.41 million as of Sept. 30, 2024.Merger AnnouncementAlong with its third-quarter results release, the company mentioned its recently signed merger agreement with Essential Utilities, Inc., which was announced on Oct. 27, 2025. This merger is projected to create a leading regulated U.S. water and wastewater public utility, with a pro forma enterprise value of approximately $63 billion.Under the terms of the agreement, Essential shareholders will receive 0.305 shares of American Water for each share they own, representing a 10% premium and resulting in current American Water shareholders owning approximately 69% of the combined company.American Water’s Long-Term GuidanceAmerican Water reiterated its 2025 EPS guidance in the range of $5.70 to $5.75. The Zacks Consensus Estimate of $5.72 per share lies just below the midpoint of the company’s guided range.For 2026, the company expects to generate EPS in the range of $6.02 to $6.12. The Zacks Consensus Estimate of $6.14 per share lies above the company’s guided range.American Water plans to invest $3.7 billion in 2026. In terms of its long-term capital expenditure plan, American Water expects to invest $19-$20 billion during 2026-2030 and $46-$48 billion during 2026-2035Over the long run, most of its outlook remains unchanged. The company still expects its long-term EPS and dividend growth to be 7-9% and rate base growth to be 8-9%. How Have Estimates Been Moving Since Then?It turns out, estimates revision have trended downward during the past month.VGM ScoresAt this time, American Water Works has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for value investors.Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, American Water Works has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.Radical New Technology Could Hand Investors Huge GainsQuantum Computing is the next technological revolution, and it could be even more advanced than AI.While some believed the technology was years away, it is already present and moving fast. Large hyperscalers, such as Microsoft, Google, Amazon, Oracle, and even Meta and Tesla, are scrambling to integrate quantum computing into their infrastructure.Senior Stock Strategist Kevin Cook reveals 7 carefully selected stocks poised to dominate the quantum computing landscape in his report, Beyond AI: The Quantum Leap in Computing Power.Kevin was among the early experts who recognized NVIDIA's enormous potential back in 2016. Now, he has keyed in on what could be "the next big thing" in quantum computing supremacy. Today, you have a rare chance to position your portfolio at the forefront of this opportunity.See Top Quantum Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report American Water Works Company, Inc. (AWK): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks