Key Takeaways
- American Water and Essential Utilities shares each rose 6% today as investors sold tech stocks and bought water utilities.
- Steady, regulated earnings like American Water’s are a sensible place to hide when chip stocks sell off.
- Analysts expect American Water’s normalized EPS to grow from $5.64 in 2025 to $7.13 in 2028, about 8% a year.
- American Water still trades below its five-year average forward P/E, and its third-quarter report in the coming weeks is the next test.
American Water (AWK) and Essential Utilities (WTRG) are both up 6%. This has nothing to do with any company news. (Good gig if you can get it, right?)
The reality is – investors are running from tech. The Nasdaq was down 3% and the S&P 500 1.5% this afternoon, as money left chip and AI-hardware stocks for defensive corners of the market like utilities and consumer staples. The smaller water utilities rose 3% to 4%.
Steady is the point
Water bills don’t depend on AI budgets. American Water’s normalized EPS rose from $4.90 in 2023 to $5.64 in 2025, and analysts expect it to reach $7.13 by 2028…
That’s about 8% a year, right in the middle of management’s long-term target of 7% to 9%.
Nobody wants to guess what chip demand looks like in 2027 on a day like today. So that kind of predictability is worth paying for.
Essential is along for the ride
Essential’s jump has a simpler explanation. American Water agreed to buy it in an all-stock deal in October 2025. Each Essential share becomes 0.305 of an American Water share at closing, which the companies are targeting for the end of the first quarter of 2027. The antitrust waiting period has already expired.
So Essential’s stock trades on American Water’s price, and today it rose just as much. (Essential reports third-quarter results after the close on Nov. 3.)
TIKR tracks 13 analysts on American Water. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on American Water, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See American Water’s Analyst Ratings
Still cheap by its own standards
Even after today’s jump, American Water isn’t expensive by its own history. It closed yesterday at 23x forward earnings, well below its usual level over the past five years, and today’s move takes it closer to 24x…
It averaged 28x over that stretch and hit 47x(!) in August 2022. (It’s also up from 18x as recently as June.)
Barclays isn’t convinced. On Monday, it cut its American Water target to $127 from $130 and kept an Underweight rating, so its target sits below where the stock trades today.
My take: Investors picked a sensible place to hide. American Water’s earnings keep growing at a predictable pace whatever chip stocks do, and the stock still trades below its usual multiple. Of course, money that rushed in on a bad day for tech can rush out just as fast. The third-quarter report in the coming weeks is the next real test of that 7% to 9% target.
So what is American Water stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what American Water could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
