American Water Works Co Inc (NYSE:AWK) Beats Q3 2025 Estimates and Introduces 2026 Guidance

American Water Works Co Inc (NYSE:AWK) has reported financial results for the third quarter of 2025, demonstrating performance that exceeded analyst expectations on both revenue and earnings per share. The company's latest figures, coupled with a reaffirmed 2025 outlook and the introduction of 2026 guidance, paint a picture of steady operational execution in the regulated water utility sector.

Quarterly Performance Versus Estimates

The company's third-quarter results showcased a solid beat on consensus estimates, driven by continued execution of its capital investment and rate case strategy.

• Revenue: The company reported Q3 2025 revenue of $1.451 billion, surpassing analyst estimates of $1.365 billion.
• Earnings Per Share: Diluted EPS for the quarter came in at $1.94, exceeding the estimated $1.90.

This performance builds on the same period from the prior year, where the company reported EPS of $1.80 on revenue of $1.323 billion. The year-to-date figures further reinforce this growth trajectory, with EPS of $4.47 compared to $4.17 in the first nine months of 2024. The increase in operating revenues was attributed primarily to the implementation of new rates from general rate cases and infrastructure proceedings, which are designed to recover the company's significant capital and acquisition investments.

Market Reaction and Price Action

Following the earnings release, the market's immediate reaction appears measured. The stock showed no significant movement in after-hours trading. When viewed over recent timeframes, the stock has experienced modest declines:

• Last Week: -6.5%
• Last Two Weeks: -4.8%
• Last Month: -3.1%

This price action suggests that the strong quarterly beat may have been largely anticipated by the market, or that broader market or sector factors are influencing the stock. The absence of a sharp positive movement post-earnings indicates that the results, while solid, were likely in line with the market's elevated expectations for the stable utility.

Forward Guidance and Strategic Initiatives

A significant component of the earnings announcement was the company's updated forward-looking financial guidance. American Water affirmed its full-year 2025 weather-normalized EPS guidance range of $5.70 to $5.75. More notably, the company initiated its 2026 EPS guidance for the first time, projecting a range of $6.02 to $6.12. At the midpoint, this represents an 8% growth over the 2025 guidance, aligning perfectly with the company's long-term EPS growth target of 7-9%.

The press release also highlighted a transformative strategic move: a definitive merger agreement with Essential Utilities. This all-stock transaction, expected to close by the end of the first quarter of 2027, would create a leading regulated U.S. water and wastewater utility with a pro forma market capitalization of approximately $40 billion. The company emphasized that the merger is driven by compelling strategic, customer, and financial rationale, combining two complementary businesses.

Capital Investment and Long-Term Targets

American Water continues to execute on a substantial capital investment plan, having invested $2.2 billion in the first nine months of 2025 with a full-year plan of approximately $3.2 billion. Looking further ahead, the company has established a capital investment plan of $19-$20 billion for the 2026-2030 period and $46-$48 billion for 2026-2035, underscoring its commitment to infrastructure renewal and growth. All of the company's long-term targets remain unchanged, including rate base growth of 8-9% and dividend per share growth of 7-9%.

For a detailed look at historical earnings, future estimates, and analyst projections, you can review the earnings and estimates data for AWK.

Disclaimer: This article is for informational purposes only and does not constitute investment advice of any kind. Readers should conduct their own research and consult with a qualified financial advisor before making any investment decisions.