Valued at a market cap of $24.3 billion, American Water Works Company, Inc. (AWK) is a Camden, New Jersey-based company that offers water and wastewater services on military installations, and undertakes contracts with municipal customers, primarily to operate and manage water and wastewater facilities, as well as offers other related services.
This water utility company has considerably underperformed the broader market over the past 52 weeks. Shares of AWK have declined 12.4% over this time frame, while the broader S&P 500 Index ($SPX) has soared 26.6%. Moreover, on a YTD basis, the stock is down 4.3%, compared to SPX’s 8.1% rise.
Looking closer, AWK has also lagged the State Street Utilities Select Sector SPDR ETF (XLU), which gained 6.9% over the past 52 weeks and 2.9% on a YTD basis.
On Apr. 29, shares of AWK closed down marginally after its Q1 earnings release. The company’s operating revenue increased 5.7% year-over-year to $1.2 billion, while its adjusted EPS of $1.01 declined around 1% from the year-ago quarter. Looking ahead, its management affirmed its long-term targets for both earnings and dividend growth at 7% to 9%.
For the current fiscal year, ending in December, analysts expect AWK’s EPS to grow 8% year over year to $6.09. The company’s earnings surprise history is disappointing. It missed the consensus estimates in three of the last four quarters, while surpassing 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” rating.
The configuration has remained fairly stable over the past three months.
On May 7, UBS maintained a “Neutral” rating on AWK but lowered its price target to $137, indicating a 9.7% potential upside from the current levels.
The mean price target of $140.09 suggests a 12.2% premium to its current price levels, while its Street-high price target of $160 implies a 28.2% potential upside.
