American Water adjusted earnings reach $2.00 per share despite revenue and estimate misses
Key Facts
American Water reported on October 28 third-quarter results for the period ended September 30, 2026, with adjusted earnings of $2.00 per share, compared with $1.89 in the year-earlier period. But the result fell short of analysts’ estimate of $2.07, while revenue was $1.510 billion, below the market consensus of $1.59 billion. Year over year, revenue rose from $1.451 billion, and net income attributable to shareholders increased to $387 million from $379 million. The results thus combine annual growth in revenue and adjusted earnings with a quarterly miss against market estimates. At the same time, the company narrowed its 2026 adjusted guidance range and introduced separate earnings guidance for 2027.
Earnings per share under GAAP were $1.94 in the third quarter of 2026, the same level recorded in the third quarter of 2025. For the first nine months of the year, GAAP earnings were $4.56 per share, compared with $4.47 in the corresponding period of 2025. The comparison shows that quarterly earnings under the accounting standard were unchanged year over year, while the nine-month total increased. Analysts’ estimates before the results moved in opposite directions: earnings-per-share estimates fell 2% in the 60 days before the announcement, while revenue forecasts rose about 4% over the same period. Actual revenue was above its year-earlier level but did not reach the consensus estimate.
The company raised the floor of its 2026 adjusted earnings guidance, narrowing the range to $6.07–$6.12 per share from $6.02–$6.12, while keeping the upper end at $6.12. American Water reaffirmed its long-term financial targets alongside the adjustment. For the first time, it provided separate 2027 guidance of $6.53 to $6.63 per share. The company said the range for next year reflects growth of 8% at the midpoint compared with the adjusted 2026 guidance range. The company is scheduled to discuss the results and new guidance at a conference on October 29, 2026, at 9 a.m. Eastern time.
Chief Executive John Griffith tied the company’s results so far in 2026 to what he described as “key regulatory outcomes that provide a reasonable and timely return on investments” made for customers. Regulatory decisions matter in the context of the company’s business: American Water said revenue from its regulated operations increased $60 million in the third quarter compared with the same period in 2025, and $212 million in the first nine months. The company attributed part of the increases to new rates taking effect, recovery of capital investments and acquisitions. On spending, it said its $3.7 billion 2026 capital investment plan was on track. It said it invested $2.8 billion in infrastructure improvements and growth in the first nine months, including $437 million in regulated acquisitions.
The company said investment and acquisition financing was accompanied by higher interest expense, which increased $9 million in the third quarter and $32 million in the first nine months of 2026 compared with the same periods a year earlier. American Water attributed the increases to additional short- and long-term debt, used mainly to fund capital investments and acquisitions. It also said acquisitions had added about 81,000 customer connections as of September 30, including Nexus Water systems. That places the expansion of the customer base alongside the infrastructure spending plan, while the interest figures show one cost of financing those activities. In the second quarter, net income attributable to shareholders was $315 million, compared with $289 million in the year-earlier quarter.
The proposed merger with Essential Utilities represents another avenue for expansion, alongside the investment and acquisitions American Water outlined in its results. The company said three state regulators had approved the deal and that it had reached settlements in Pennsylvania, North Carolina and Texas. Essential Utilities expects to complete the merger by the end of the first quarter of 2027, subject to customary closing conditions, including shareholder and regulatory approvals. American Water shares, trading under the ticker AWK, closed at $141.10 on October 27, the eve of the results announcement. The company also announced on October 27 a quarterly cash dividend of $0.895 per share, payable on December 1 to shareholders of record on November 12, 2026.