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American Water Works Co Inc AWK

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Morningstar’s Analysis

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American Water Signals Visibility for Acquisition Targets; Increasing Our Fair Value Estimate

Charles Fishman, CFA Equity Analyst

Analyst Note

| Charles Fishman, CFA |

We are increasing our fair value estimate to $122 per share from $113 after American Water Works reported strong 2020 earnings, increased its five-year capital expenditure forecast, and reaffirmed its 7%-10% long-term EPS growth target. The increase in our fair value estimate was primarily due to the increase in our estimate of future investment opportunities and the impact on earnings growth. Our fair value estimate also benefited from time-value appreciation.

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Company Profile

Business Description

Founded in 1886, American Water Works is the largest investor-owned U.S. water and wastewater utility, serving approximately 3.5 million customers in 16 states. It provides water and wastewater services to residential, commercial, and industrial customers and operates predominantly in regulated markets, which account for about 90% of earnings. Its nonregulated market-based businesses provide complementary water and wastewater services for municipalities and military bases.

Contact
1 Water Street
Camden, NJ, 08102-1658
T +1 856 955-4001
Sector Utilities
Industry Utilities - Regulated Water
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2020
Stock Type Classic Growth
Employees 7,000

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