American Water Works Co. (NYSE:AWK) is slated to release its fourth-quarter and full-year 2018 results after the market closes on Tuesday, Feb. 19. 

Shares of the largest publicly traded U.S. water and wastewater utility have returned 14.3% for the one-year period through Jan. 23. That's an even better performance than it might seem since the S&P 500 (including dividends) fell 5.2% over this period. Moreover, the stock is a big winner over longer periods, returning 505% over the last 10 years -- 73% more than the S&P 500's 292% return.

For additional context, shares of the second-, third-, and fourth-largest (by market cap) publicly traded water utilities that operate in the U.S. -- Aqua AmericaAmerican States Water, and California Water Service Group -- returned negative-1.4%, 16.2%, and 7.9%, respectively, over the last year.

Here's what to watch in American Water's report.

Woman dressed in athletic wear drinking from a water bottle with blue sky in background.

Image source: Getty Images.

Key Q4 numbers

Here are American Water's year-ago results and Wall Street's estimates to use as benchmarks.

Metric

Q4 2017 Result

Wall Street's Q4 2018 Consensus

Wall Street's Projected Year-Over-Year Change

Revenue

$821 million

$858 million

4.5%

Adjusted earnings per share (EPS)

$0.69

$0.69

--

Data sources: American Water Works and Yahoo! Finance.

Key full-year numbers

Metric

2017 Result

Wall Street's 2018 Consensus

Wall Street's Projected Year-Over-Year Change

Revenue

$3.36 billion

$3.42 billion

1.8%

Adjusted  EPS

$3.05

$3.31

8.5%

Data sources: American Water Works and Yahoo! Finance.

American Water is approaching its fourth-quarter earnings report on a solid note. For the first nine months of the year, revenue rose 2.1% year over year, EPS based on generally accepted accounting principles (GAAP) grew 5.9%, and EPS adjusted for one-time factors jumped 11.5%. (Adjusted EPS is the better earnings metric to consider, as it compares apples to apples.)  

The company has beaten the Street's earnings expectations in each of the three reported quarters of 2018. While these beats have been on the small side, they are notable -- particularly last quarter's solid 7.3% beat -- because revenue and earnings for regulated water utilities tend to be quite predictable. 

O&M efficiency ratio

Investors should watch American Water's operation and maintenance (O&M) efficiency ratio for the one-year period through the fourth quarter. This metric was 35.7% for the one-year period ending last quarter, down from the year-ago period's 35.9%. (A decline indicates an improvement.) This ratio reflects how well the company is controlling costs in its core regulated business.

The water utility giant has been steadily improving this ratio, which was higher than 44% in 2010. Its goal is to achieve 32% by 2022.

Dividend 

American Water currently pays a quarterly cash dividend of $0.455 per share, which translates to a dividend yield of 1.97% based on the stock's closing price on Jan. 23. A dividend change won't come when the company releases its earnings, but should follow in April. 

American Water has raised its dividend each year since its initial public offering (IPO) in April 2008, and investors can expect an increase this year. A dividend hike in the 8% to 10% range is probably in the cards, as the company aligns its dividend raises with its financial performance.

The last three dividend increases were 9.6% (April 2018), 10.7% (April 2017), and 10% (April 2016).

2019 guidance

Investors can likely expect American Water to reaffirm its previously issued 2019 guidance. In mid-December, the company said it expects EPS of $3.54 to $3.64 this year.  

Check out the latest American Water Works earnings call transcript.