AWR Gains From Investment & Rising Demand as Customer Base Expands

American States Water AWR continues to benefit from a regulated structure, strong demand from an expanding customer base, strategic capital investment and a diversified business model that provides a clear path for revenue and earnings growth.

Long-term (three to five years) earnings growth of the company is projected at 5.65%.

AWR’s Tailwinds

American States Water benefits from a stable utility customer base and continues to expand its electricity and water customers at a steady pace. Growth is supported by newly authorized electric and water rates that boost revenues and earnings from regulated utilities. It is supported by long-term military utility contracts and new project awards.

New approved rates support ongoing infrastructure investments, ensuring safe, clean and reliable water and wastewater services for customers. The company plans capital expenditure of $185-$225 million in its regulated utilities during 2026 to strengthen its operations.

AWR continues to expand its operation with several water and wastewater systems. Through these initiatives, the company expects to add 3,800 customers in the upcoming five years. The company plans to acquire water system assets from the city of Norwalk in Los Angeles County. It has been making strategic investments to upgrade and expand assets.

American States Water is utilizing lower debts than its industry peers to run its operation. Its strong times interest earned ratio indicates that the company will be able to meet its interest obligations without any difficulties.

AWR’s Headwinds

American States Water remains focused on the single state of California, which can adversely affect the company’s financial performance. Companies concentrated in a single state are heavily influenced by conditions within the state, including political and regulatory developments, water supply availability, labor and utility cost trends, and broader economic conditions.

Price Performance of AWR

In the past three months, American States Water shares have gained 0.7% compared with the industry’s 8.3% growth.

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AWR’s Zacks Rank & Other Stocks to Consider

American States Water currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the same sector include Consolidated Water CWCO, Essential Utilities WTRG and IDACORP IDA. All the stocks carry a Zacks Rank #2 eacg, at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CWCO, WTRG and IDA's dividend yields are 1.63%,3.34% and 2.50%, respectively.

The Zacks Consensus Estimate for Consolidated Water, Essential Utilities and IDACORP 2026 earnings is pegged at $1.57, $2.25 and $6.42 per share, suggesting year-over-year growth of 25.60%, 2.27% and 8.81%, respectively.

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IDACORP, Inc. (IDA): Free Stock Analysis Report

American States Water Company (AWR): Free Stock Analysis Report

Consolidated Water Co. Ltd. (CWCO): Free Stock Analysis Report

Essential Utilities Inc. (WTRG): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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