Is American Water Works Stock Underperforming the Dow?

With a market cap of $25.2 billion, American Water Works Company, Inc. (AWK) is a leading provider of water and wastewater services across the United States. Serving approximately 3.5 million customers in 14 states, the Camden, New Jersey-based company operates a vast network of infrastructure, including treatment plants, pipelines, wells, and pumping stations.

Companies valued at $10 billion or more are generally considered “large-cap” stocks, and American Water Works fits this criterion perfectly. Through its Regulated Businesses segment, it delivers essential services to residential, commercial, industrial, and public sector customers. American Water Works plays a crucial role in managing and maintaining vital water and wastewater systems for diverse communities.

The water utility company has seen a 15.8% decline from its 52-week high of $150.68, reached on Sep. 17. Over the past three months, its shares have dipped 14.8%, underperforming the broader Dow Jones Industrials Average’s ($DOWI) 5.1% gain during the same period.

Longer term, AWK is down 3.9% on a YTD basis, lagging behind DOWI’s 15.8% return. In addition, shares of American Water Works have declined 3.1% over the past 52 weeks, compared to the  Dow Jones’ nearly 17% rise over the same time frame.

AWK has shown a bearish trend, trading below its 50-day moving average since October. Recently, the stock also dropped below its 200-day moving average

Despite reporting weaker-than-expected Q3 EPS of $1.80 on Oct. 30, shares of AWK rose 1.8% the following day due to robust revenue performance and encouraging future projections. The 13.4% year-over-year revenue growth to $1.3 billion exceeded estimates by 9.8%, reflecting successful rate increases and customer additions. Furthermore, the company reiterated its 2024 EPS guidance of $5.25 – $5.30, issued a strong 2025 EPS guidance of $5.65 – $5.75, and announced ambitious long-term capital investments of $40 billion – $42 billion through 2034, bolstering investor confidence.

However, AWK has underperformed its rival, Essential Utilities, Inc. (WTRG), which has experienced a slight decline YTD and a 3.1% gain over the past 52 weeks.

Analysts are cautious about AWK’s prospects, given its underperformance compared to broader markets over the past year. With a consensus “Hold” rating from 15 analysts, the mean price target of $144.33 indicates a 13.8% premium to current levels.

On the date of publication, Sohini Mondal 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. More news from Barchart

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.