American Water Works Company Inc

American Water Works Company, Inc. (NYSE: AWK) is a water and wastewater utility company. The Company's primary business involves the ownership of utilities that provide water and wastewater services to residential, commercial, industrial, public authority, fire service and sale for resale customers. It also operates other market-based businesses that provide water and wastewater services to the United States government on military installations, as well as municipalities. The Company operates its business primarily through one segment: the Regulated Businesses segment.

Key Financial and Business Updates:

• Strong Q2 Earnings Performance: American Water Works Company, Inc. (NYSE: AWK) has released its Q2 2023 financial results, demonstrating robust performance. Earnings for the quarter were 1.44 USD per share, a notable increase from 1.20 USD per share in the same period of 2022. Year-to-date earnings for 2023 also showed growth, reaching 2.37 USD per share compared to 2.07 USD per share for the corresponding period in 2022.
• Affirmation of 2023 Guidance and Long-Term Targets: American Water reaffirmed its 2023 earnings per share guidance, maintaining a range of 4.72 USD to 4.82 USD on a weather-normalized basis. The company also restated its long-term financial targets for the 2023-2027 period, which includes an EPS and dividend growth rate target ranging from 7% to 9%.
• Strong Performance in Regulated Businesses: The company reported robust results in its Regulated Businesses segment, with net income reaching 278 million USD in Q2 2023, compared to 219 million USD for the same period in 2022. This growth was primarily driven by authorized revenue increases resulting from rate cases and infrastructure proceedings.
• Capital Investment and Future Plans: American Water emphasized its capital investment plan, which saw investments of 1.2 billion USD in the first half of 2023, including infrastructure enhancements and replacements within the Regulated Businesses. The company has ambitious investment plans, targeting a total investment of approximately 2.9 billion USD across its operational footprint in 2023, including acquisitions.
• Successful Senior Notes Issuance and Dividend Declaration: Furthermore, the company successfully issued 1.035 billion USD in aggregate principal amount of 3.625% Exchangeable Senior Notes due 2026 through its finance subsidiary, American Water Capital Corp. The net proceeds from this issuance will be utilized for general corporate purposes. Additionally, American Water declared a quarterly cash dividend payment of 0.7075 USD per share of common stock, payable on September 1, 2023, to shareholders recorded as of August 8, 2023.
  

Technical Observation (on the daily chart):

The Relative Strength Index (RSI) over a 14-day period stands at 21.02, currently inside the oversold zone with expectations of some consolidation or a short-term upward momentum. The current price is currently near an important support zone of USD 100.00-USD 115.00 zone, with expectations of a momentum in the upward directions from the support levels as there has been a correction of around 28.26% since February 02, 2023. Additionally, the stock's current positioning is below both 21-period SMA and 50-period SMA, which may serve as a dynamic short-term resistance levels.  

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Buy’ rating has been given to American Water Works Company, Inc. (NYSE: AWK) at its current price of USD 116.93 as of October 06, 2023, 06:45 am PDT. 

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The yellow colour line reflects the 21-period simple moving average (SMA) while the blue line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The orange colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The red and green colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps with easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is October 06, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.