Section 1: Company Overview and Fundamentals

1.1 Company Overview:

American Water Works Company, Inc. (NYSE: AWK) is a water and wastewater utility company. The Company's primary business involves the ownership of utilities that provide water and wastewater services to residential, commercial, industrial, public authority, fire service and sale for resale customers. It also operates other market-based businesses that provide water and wastewater services to the United States government on military installations, as well as municipalities.

Kalkine’s Dividend Income Report covers the Company Overview, Key positives & negatives, investment summary, Business updates and insights into company recent financial results, Key Risks & Outlook, Price performance and technical summary, Target Price, and Recommendation on the stock.

Stock Performance:

• The stock has corrected by 10.91% in the past three months and has also corrected by around 17.53% in the past nine months.
• The stock is leaning towards its lower band of its 52-week range of USD 153.43 and 52-week low price of USD 114.25. Post the announcement of FY23 results the stock has consolidated with correction of only around 2.11% and currently trading around important support zone of USD 100-110 levels so the price can show a reversal if the support zones are respected.
• The price is currently trading below its long-term (200-day) SMA and its short-term (50-day) SMA , with the current RSI of 43.94.

1.2 The Key Positives, Negatives, and Investment summary

1.3 Key Metrics:

American Water Works Company Inc showcased a dynamic financial performance from 2019 to 2023. Despite a slight contraction in revenue in 2022, the company demonstrated consistency, reaching USD 4,234 million in revenue in 2023. Over this period, the trend in net income displayed steady growth, rising from USD 621 million in 2019 to USD 944 million in 2023, with a marginal dip to USD 820 million in 2022 followed by a substantial recovery the subsequent year, reflecting the company's resilience. This comprehensive analysis underscores American Water Works Company Inc's adeptness in navigating challenges and adapting, positioning itself for sustained success in the industry. The financial data highlights the company's robustness and strategic management, offering stakeholders valuable insights into its performance and growth trajectory.

1.4 Top 10 shareholders:

The top 10 shareholders together form ~38.63% of the total shareholding, signifying diverse shareholding. The Vanguard Group, Inc, and State Street Global Advisors (US) are the biggest shareholders, holding the maximum stake in the company at ~12.24% and ~5.65%, respectively.

1.5 Consistent dividend History

The Board of Directors of the company announced on December 6, 2023, the approval of a quarterly cash dividend distribution of USD 0.7075 per share of common stock. This dividend will be disbursed to shareholders of record as of February 8, 2024, and is scheduled for payment on March 1, 2024.

The declaration of a quarterly cash dividend by American Water's Board of Directors underscores the company's commitment to returning value to its shareholders. This dividend distribution reflects the company's confidence in its financial position and its ability to generate consistent cash flows. Shareholders can anticipate the dividend payment on March 1, 2024, providing them with a tangible reward for their investment in American Water.

Section 2: Business Updates and Corporate Business Highlights

2.1 Recent Updates:

The below picture gives an overview of the recent updates:

 2.2 Insights of FY23:

Section 3: Key Risks and Outlook:

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

Stock Performance:

• The stock has corrected by 10.91% in the past three months and has also corrected by around 17.53% in the past nine months.
• The stock is leaning towards its lower band of its 52-week range of USD 153.43 and 52-week low price of USD 114.25. Post the announcement of FY23 results the stock has consolidated with correction of only around 2.11% and currently trading around important support zone of USD 100-110 levels so the price can show a reversal if the support zones are respected.
• The price is currently trading below its long-term (200-day) SMA and its short-term (50-day) SMA , with the current RSI of 43.94.

 4.2 Fundamental Valuation

Valuation Methodology: EV/Sales per share Multiple Based Relative Valuation

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is March 26, 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: The report publishing date is as per the Pacific Time Zone.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

 Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

 Stop-loss: It is a level to protect against further losses in case of unfavorable movement in the stock prices.