American Water (NYSE: AWK) guides to 8% EPS growth next year and lifts its outlook floor

Posted by Caroline Horne on Oct 31st, 2026

What happened

American Water Works Company, Inc. (NYSE: AWK) set 2027 standalone adjusted EPS guidance of $6.53 to $6.63. It also narrowed its 2026 adjusted range to $6.07 to $6.12 from $6.02 to $6.12. That lifts the bottom and leaves the top unchanged.

The company says the 2027 range means 8% EPS growth at the midpoint over the 2026 range. That is inside its unchanged long-term EPS growth target of 7% to 9%. It also set a 2027 standalone capital investment plan of $4.1 billion.

Third-quarter adjusted EPS was $2.00 against $1.89 a year earlier, a 5.8% rise by OptimistFi's calculation. For the first nine months, adjusted EPS was $4.63 against $4.40. CEO John Griffith pointed to "key regulatory outcomes that provide for a reasonable and timely return on the investments made for the benefit of our customers."

Key numbers

Metric	Latest	Change	Source
Q3 adjusted diluted EPS	$2.00	from $1.89, +5.8%	SEC 8-K Exhibit 99.1, change calculated by OptimistFi
Nine-month adjusted diluted EPS	$4.63	from $4.40, +5.2%	SEC 8-K Exhibit 99.1, change calculated by OptimistFi
Regulated Businesses net income, nine months	$946 million	from $872 million, +8.5%	Calculated from SEC 8-K Exhibit 99.1
2027 standalone adjusted EPS guidance	$6.53 to $6.63	+8% at midpoint versus the 2026 range	SEC 8-K Exhibit 99.1
Pending annualized revenue request	$360 million		SEC 8-K Exhibit 99.1

Adjusted earnings versus GAAP

On a GAAP basis the quarter was flat, so the adjusted gain comes from the adjustments. Diluted GAAP EPS was $1.94 in the third quarter of both 2026 and 2025. Net adjustments added $0.06 per share in 2026 and subtracted $0.05 a year earlier.

The adjustments cover the estimated weather impact, interest income on the Homeowner Services Group seller note and merger transaction costs. Consolidated net income rose to $387 million from $379 million. Diluted shares grew to 199 million from 195 million. For nine months, GAAP EPS was $4.56 against $4.47.

The 2026 adjusted guidance leaves out merger transaction costs, weather and incremental interest income on the seller note through Feb. 13.

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Why it matters

The regulated utilities carry the results. Regulated Businesses net income reached $946 million in the first nine months, up $74 million or 8.5% from $872 million a year earlier. In the third quarter it was $407 million against $383 million.

OptimistFi has argued that the stock only works if regulators keep allowing recovery of rising capital and operating costs. Revenue from completed rate cases and infrastructure proceedings strengthens that view.

Regulated operating revenues rose $60 million in the quarter and $212 million in nine months. The company credits mainly authorized increases from completed general rate cases and infrastructure proceedings, plus revenue from closed acquisitions.

Costs are climbing too. Regulated operating expenses rose $30 million in the quarter and $103 million in nine months, partly from purchased water, power and chemicals. Depreciation rose $18 million in the quarter. Interest expense rose $9 million in the quarter and $32 million in nine months on added debt for capital investments and acquisitions. The company says these costs partly offset the revenue growth.

The rate case pipeline and capital plan

Since Jan. 1 the company has been authorized additional annualized revenue of $284 million. That includes $179 million from general rate cases and $105 million from infrastructure surcharges. New rates took effect in the third quarter, including in Pennsylvania and New Jersey.

More decisions are pending. General rate cases are in progress in five jurisdictions and surcharge filings are in two, for a total annualized request of $360 million. That is $76 million more than has been authorized this year, by OptimistFi's calculation.

Spending is what builds the rate base. The company invested $2.8 billion in the first nine months, including $437 million for regulated acquisitions, and plans about $3.7 billion for 2026. Its standalone plan is $20+ billion for 2026-2030, and the long-term rate base growth target of 8% to 9% is unchanged. About 81,000 customer connections were added through acquisitions by Sept. 30, including the Nexus Water systems.

The Essential Utilities merger

The company still expects to close its merger with Essential Utilities, Inc. by the end of the first quarter of 2027. Three states have approved, and settlements have been reached in Pennsylvania, North Carolina and Texas. The 2027 guidance and long-term targets are stated on a standalone basis.

The release lists merger risks. The exchange ratio is fixed and will not adjust for stock price moves. Regulators could attach burdensome conditions to approvals. Closing could be delayed.

What's next

The company holds its third-quarter earnings call on Thursday, Oct. 29, at 9 a.m. Eastern to discuss the quarter, the 2027 guidance and the long-term targets. The board declared a quarterly dividend of $0.8950 per share on Oct. 27, payable Dec. 1 to holders of record Nov. 12.

A merger close by the end of the first quarter of 2027 would match the company's plan. A delay, or approvals that require dispositions, would weaken the picture. Further rate case decisions on the $360 million request will test whether recovery keeps pace with rising costs.