American Water Works Co. Inc. (NYSE: AWK) is scheduled to report its fourth-quarter financial results on Wednesday after the markets close. The consensus estimates from Thomson Reuters call for $0.55 in earnings per share (EPS) on $827.48 million in revenue. The same period from the previous year had $0.52 in EPS on $731.38 million in revenue.

Though American Water Works is the king of the water utilities in the United States, it does have some exposure to Canada, and slower industrial activity will mean lower water bills from corporate water clients. This is still the best-run outfit, and the investing community seems to have an insatiable desire to pay up for defensive water stocks. American Water has raised its dividend annually now and has set the expectations for more dividend hikes each year ahead.

This remains the best water stock for investors with a long-term outlook. In fact, American Water Works is among our own 10 stocks to own for the next decade. That being said, this water utility giant’s stock has started trading with a mega premium to utilities. Its most recent share price values the stock at 23.4 times the expected $2.83 earnings per share (EPS) for 2016.

A few analysts have weighed in on this company ahead of its earnings report:

• Hilliard Lyons has a Neutral rating.
• HSBC has a Buy rating.
• Barclays has an Overweight rating with a $70 price target.

So far in 2016, American Water Works has outperformed the broad markets, with the stock up 12% year to date. Over the past 52 weeks, the stock is up 25%.

Shares of American Water Works were trading down 0.7% at $66.21 on Wednesday, with a consensus analyst price target of $63.36 and a 52-week trading range of $48.36 to $66.95.

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