American Water Works (AWK) Hits 52-Week High On Q1 Results

The fresh water and wastewater service provider American Water Works Company, Inc. (NYSE:AWK) hit a new 52-week high of $75.25 during yesterday’s trading session before closing a tad lower at $75.20. The stock has delivered a one-year return of about 43.4%.

Over the past 52 weeks, American Water Works’ share price has ranged from a low of $48.36 to a high of $75.25. Average volume of shares traded over the last three months is approximately 2.14 million.

Why is American Water Works Moving Up?

American Water Works’ shares have been on the rise following its first-quarter 2016 results declared on May 4. The company posted first-quarter earnings of 46 cents per share, in line with the Zacks Consensus Estimate. Total revenues of $743 million were ahead of expectation by 1.9%.

American Water Works has been a decent performer having delivered positive earnings surprises in two out of the last four quarters. The long-term earnings growth of the company is presently pegged at 7.19%.

This water utility has been investing steadily in its regulated businesses. The company aims to invest $6.4 billion over the 2016–2020 time frame, which will give its earnings a boost of 7% to 10% per year in the aforesaid period. A major chunk of $5.5 billion will be directed to strengthen its regulated businesses operations. Constructive rate hike, which is also a reflection of capital investments, has increased the company’s revenues by $38.2 million year to date (May 3).

Apart from organic initiatives, strategic acquisitions are also helping the company to further expand its operations. The company completed seven acquisitions year to date adding 6,868 customers to its existing customer base. The seven pending acquisitions once completed will bring in 33,752 more customers.

The risk of failure of old water pipeline and water reservoirs is a primary source of concern for the water industry. Large water service providers like American Water Works and Aqua America Inc. (NYSE:WTR) among others are investing considerable sums of money to upgrade and expand their existing water infrastructure.

American Water Works currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the water utility space are Companhia de Saneamento Basico do Estado de Sao Paulo (NYSE:SBS) and Artesian Resources Corp. (NASDAQ:ARTNA) , both carrying a Zacks Rank #2 (Buy).

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