American Water Works Company, Inc. AWK is benefiting from new rates, which support revenue growth. The rate hikes help the regulated company recover investments in replacing aging assets and upgrading infrastructure while strengthening overall operations. AWK currently aims for 7-9% long-term earnings growth through 2030.
Recently, AWK’s unit, New Jersey American Water, received approval from the New Jersey Board of Public Utilities to implement new rates effective Sept. 15, 2026. The new rates are expected to boost annual revenues by $68 million and help fund more than $1.4 billion in ongoing water and wastewater system upgrades, including nearly 120 miles of main replacement or rehabilitation, lead service lines and PFAS treatment projects.
The approved rate plan will increase the average monthly bill by approximately $4 for residential water customers using 5,700 gallons per month, while eligible customers will receive a $9.88 monthly PFAS credit for 12 months.
As of June 30, 2026, American Water had received authorization for $216 million in additional annualized revenues since Jan. 1, including $111 million through general rate cases and $105 million through infrastructure surcharges.
The company expects to invest $3.7 billion in 2026 and $19-$20 billion through 2030 to support 8-9% rate-base growth. Overall, the new rates should support infrastructure spending through stable revenue generation and help AWK meet its long-term earnings growth target.
Utilities Benefit From Rate Revision
Higher utility rates may increase customers’ monthly bills and add to household expenses. At the same time, rate hikes at regular intervals are essential for regulated utilities as they strengthen revenue recovery, support infrastructure investments and provide utilities with better earnings visibility.
California Water Service Group CWT second-quarter 2026 revenues rose 16.5% year over year to $308.6 million. Implementation of new California rates contributed $15.3 million, while other rate/regulatory changes added another $15.0 million. New rates became effective July 1, 2026.
Essential Utilities WTRG second-quarter 2026 revenues increased 7.6%, with higher water and wastewater rates contributing about $15.9 million. New Ohio rates became effective July 22, while Texas interim rates started March 9, 2026.
The Zacks Rundown on AWK
AWK’s Earnings Estimates
The Zacks Consensus Estimate for 2026 and 2027 earnings per share indicates an increase of 7.98% and 8.52%, respectively, year over year.
Image Source: Zacks Investment Research
AWK’s Stock Trading at a Premium
AWK is trading at a premium to the industry, with a forward 12-month price-to-earnings ratio of 21.77X versus the industry average of 17.57X.
Image Source: Zacks Investment Research
AWK’s Stock Price Performance
In the past three months, the company’s shares have gained 12.8% compared with the industry’s 7.3% growth.
Image Source: Zacks Investment Research
AWK’s Zacks Rank
AWK currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Research Chief Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
American Water Works Company, Inc. (AWK): Free Stock Analysis Report
California Water Service Group (CWT): Free Stock Analysis Report
Essential Utilities Inc. (WTRG): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).