American Water Works Company, Inc. (AWK)

American Water Works Company, Inc., founded in 1886 and incorporated in Delaware in 1936, is the largest publicly-traded water and wastewater utility company in the United States by both operating revenues and population served, employing roughly 7,000 professionals to serve approximately 14 million people across 24 states. The company operates through one reportable segment, Regulated Businesses, which owns and operates water and wastewater utilities across 14 states, serving 3.6 million active customers, with Pennsylvania, New Jersey, Missouri, Illinois, and California as its top five states by revenue, generating $4,723 million in 2025 revenue (92% of total). Residential customers comprise the majority of revenue (54%), followed by commercial, wastewater, and other classes, with water supply sourced primarily from surface water (70%), groundwater (23%), and purchased water (7%).

The company's "Other" segment, contributing $417 million in 2025 revenue, includes its Military Services Group (MSG), which operates on 18 military installations under 50-year U.S. government contracts with a backlog of approximately $7.4 billion, as well as a municipal operations contract and unallocated corporate costs. American Water's growth strategy centers on acquiring water and wastewater systems in geographic proximity to existing operations, supported by favorable state regulatory mechanisms such as infrastructure surcharges, future test years, and consolidated tariffs that reduce regulatory lag. The company plans capital investments of $46–48 billion over the next decade, primarily for pipe replacement and treatment facility upgrades, and estimates $4.1 billion in capital expenditures over five years to address water quality compliance, including lead service line replacement under EPA's Lead and Copper Rule revisions.

Operations are subject to extensive regulation by state public utility commissions and federal environmental laws including the Safe Drinking Water Act and Clean Water Act. A significant corporate development is the October 26, 2025 merger agreement with Essential Utilities, Inc., a stock-for-stock transaction in which Essential shareholders will receive 0.305 shares of American Water common stock per Essential share; upon completion, expected by the end of Q1 2027, Essential will become a wholly owned subsidiary while American Water retains its name and Camden, New Jersey headquarters. The company faces competition primarily from other investor-owned utilities including Essential, American States Water Company, and California Water Service Group, as well as infrastructure funds and multi-utility companies, though its regulated markets benefit from high barriers to entry via franchises and certificates of public convenience and necessity.

Additional risks include condemnation proceedings, such as an ongoing lawsuit involving Cal Am's Monterey system assets, and exposure to environmental liability under CERCLA and similar state laws.