Growth, Yield and Safety has American Water Rolling Says CEO

Shattering the notion that utility stocks are boring, shares of American Water Works (AWK) - Get Report have surged 30 percent so far in 2016. But don't tell the company's CEO Susan Story that it's all hot money flooding into the stock that will leave just as quickly. 'Water has a much lower risk profile for capital deployment,' said Story. 'Plus we have a low beta, two percent dividend yield and seven percent earnings per share growth guidance so we have a good argument for our stock.' Last week American Water Works reported second-quarter net income of $137 million, or $0.77 a share, on revenue of $827 million. The results beat Wall Street expectations of $0.72 a share. American Water Works expects full-year earnings in the range of $2.75 to $2.85 a share. The company said it plans to invest $1.4 billion to $1.5 billion across its footprint in 2016, with the majority to improve its water and wastewater systems. Included in this range for the full year 2016 are the acquisitions expected to close this year. All closed and pending acquisitions are expected to add approximately 55,400 new customers to the American Water footprint.