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On Wednesday, Argus analysts maintained their Buy rating on American Water (NYSE:AWK) Works Company Inc. (NYSE: AWK) with a steady price target of $155.00, placing it near the high end of analyst targets ranging from $122 to $160. The firm highlighted the company’s consistent revenue and earnings growth, with InvestingPro data showing impressive 11.8% revenue growth in the last twelve months, attributing it to strategic rate hikes and acquisitions that have broadened its customer base. American Water Works, recognized as the largest U.S.-traded water and wastewater utility, is also reaping the benefits of infrastructure surcharges, ensuring a reliable revenue flow.
Analysts at Argus are optimistic about American Water Works’ ongoing strategy to grow through acquisitions, especially as cash-strapped municipalities are inclined to sell their utility assets. The company’s robust financial position and commitment to increasing dividends also garnered positive remarks. The target price set by Argus reflects their confidence in the company’s financial trajectory.
American Water Works has demonstrated strong market performance in the current year, with an 8% rise in share value, outpacing the S&P 500’s 1% decline. The company’s low beta of 0.46 suggests less volatility compared to the broader market, indicating stability in its stock performance.
The company’s recent financial report for the first quarter of 2025 showed a notable 11% increase in results compared to the same period the previous year. This uptick in performance has been met with a proactive response from the management, who have expressed their confidence in the company’s prospects by announcing an 8% dividend increase in April. InvestingPro data reveals the company has maintained dividend payments for 18 consecutive years, with an attractive current dividend yield of 2.47% and a 17% dividend growth rate over the last twelve months.
In other recent news, American Water Works reported its first-quarter 2025 earnings, revealing a revenue beat but a slight miss on earnings per share (EPS) compared to analyst forecasts. The company reported an EPS of $1.05, slightly below the forecasted $1.09, while revenue reached $1.14 billion, surpassing the anticipated $1.12 billion. This revenue increase was attributed to authorized rate increases, acquisitions, and organic customer growth. American Water Works continues to focus on infrastructure investments and strategic acquisitions, with a capital investment of $518 million in the first quarter. The company reaffirmed its 8% EPS growth target for 2025 and plans to grow its regulated rate base by 8-9%. Additionally, American Water Works announced an increase in its quarterly cash dividend, reflecting an 8.2% rise. The company is also engaged in active regulatory cases, including settlements in Missouri and Virginia, which resulted in approved revenue increases. S&P and Moody’s have affirmed the company’s strong investment-grade credit ratings, citing its low-risk profile and steady financial performance.
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