How much a stock's price changes over time is a significant driver for most investors. Not only can price performance impact your portfolio, but it can help you compare investment results across sectors and industries as well.

Another thing that can drive investing is the fear of missing out, or FOMO. This particularly applies to tech giants and popular consumer-facing stocks.

What if you'd invested in American Water Works (AWK) ten years ago? It may not have been easy to hold on to AWK for all that time, but if you did, how much would your investment be worth today?

American Water Works' Business In-Depth

With that in mind, let's take a look at American Water Works' main business drivers.

The water supply and wastewater service provider, American Water Works Company, was founded in 1886. It provides essential water services to more than 14 million customers in 24 states and has an employee strength of 6,700. The company also acquires small water service providers to expand its customer base. As of Feb. 10, 2025, there were 194,947,313 shares of the company’s outstanding common stock.

American Water Works’ contracts with the U.S. government for work on various military installations, which will expire between 2051 and 2073, have remaining performance obligations (RPOs) of $7.4 billion as of Dec. 31, 2024, as measured by estimated remaining contract revenues. Contracts with municipalities and commercial customers, that will expire between 2026 and 2038, have RPOs of $612 million as of Dec 31, 2024, which indicates that the company has a very strong long-term revenue base.

American Water Works operates a large water and wastewater infrastructure to efficiently serve the expanding customer base in the United States. It operates 80 surface water treatment plants, 520 groundwater treatment plants, 190 wastewater treatment plants, 54,500 miles of transmission, distribution and collection mains and pipes, 1,200 groundwater wells, 1,800 water and wastewater pumping stations, 1,100 treated water storage facilities as well as 75 dams. The company has a systematic capital investment plan to further strengthen its existing operations.

American Water Works primarily operates through the Regulated Businesses segment. This segment’s operating revenues were $4.29 billion, $3.9 billion, and $3.5 billion accounting for 92%, 93% and 92% of the company’s total operating revenues for 2024, 2023, and 2022 respectively.

In February 2015, the company’s board of directors authorized an anti-dilutive stock repurchase program., This allows the company to purchase up to 10 million shares of its outstanding common stock from time to time over an unrestricted period of time. As of Dec. 31, 2024, there were 5.1 million shares of common stock available for purchase under the program.

 

Bottom Line

While anyone can invest, building a lucrative investment portfolio takes research, patience, and a little bit of risk. If you had invested in American Water Works ten years ago, you're probably feeling pretty good about your investment today.

A $1000 investment made in March 2015 would be worth $2,857.06, or a gain of 185.71%, as of March 11, 2025, according to our calculations. This return excludes dividends but includes price appreciation.

Compare this to the S&P 500's rally of 174.66% and gold's return of 140.22% over the same time frame.

Analysts are anticipating more upside for AWK.

.American Water Works has been gaining from contributions from acquired assets and military contracts. New water and wastewater rates implemented in its service region are also boosting performance. American Water continues to expand its operations through organic and inorganic initiatives. The long-term capital expenditure of the company is to strengthen its infrastructure and serve an expanding customer base.  The decline in interest rates will reduce project expenses and boost margins. The company has ample liquidity to meet its debt obligations. The stock has outperformed its industry in the past year. Yet, demand for water keeps changing with weather conditions and its operations are subject to stringent regulations. The timely approval of rate cases is a concern. Pipeline breaks and related contamination are other headwinds

The stock has jumped 21.28% over the past four weeks. Additionally, no earnings estimate has gone lower in the past two months, compared to 2 higher, for fiscal 2025; the consensus estimate has moved up as well.

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American Water Works Company, Inc. (AWK) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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