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American Water Works Co Inc AWK

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Morningstar’s Analysis

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Acquisition Opportunities for American Water Accelerating; Increasing Our Fair Value Estimate

Charles Fishman, CFA Equity Analyst

Analyst Note

| Charles Fishman, CFA |

We are increasing our fair value estimate to $113 per share from $109 after American Water Works reported strong 2020 third-quarter earnings, increased 2020 earnings guidance, and reaffirmed a long-term EPS growth target of 7%-10%. EPS in the recently ended quarter was $1.46 versus $1.33 in the same period last year. Warm dry weather benefited earnings by $0.06 per share, and COVID-19 had a positive impact of $0.03 due in large part to a 13.6% year-over-year increase in residential demand.

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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 military bases, municipalities, oil and gas exploration and production companies, and other industrial customers.

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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