American Water Works (NYSE:AWK) is scheduled to release its fourth-quarter and full-year 2019 results after the market closes on Tuesday, Feb. 18.  

Shares of the largest publicly traded U.S. water and wastewater utility have returned 43.5% over the one-year period through Jan. 17, compared with the S&P 500's 28.9% return over this period. With this type of performance, investors will be expecting continued smooth sailing on the quarterly results front.

Along with the utility sector in general, many water utility stocks have been performing well, driven in part by the Federal Reserve's interest rate cuts last year and investors' concerns that a recession is coming. Indeed, along with its electric utility brethren NextEra Energy, American Water stock is one of the five best stocks to ride out a recession.

Here's what to watch in the company's upcoming report.

Drops of water falling into a very deep blue body of water and causing ripples.

Image source: Getty Images.

Key quarterly numbers

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

Metric

Q4 2018 Result

Wall Street's Q4 2019 Consensus Estimate

Wall Street's Projected Growth 

Revenue

$850 million

$923.57 billion

8.7%

Adjusted EPS

$0.69

$0.72

4.3%

Data sources: American Water Works and Yahoo! Finance. EPS = earnings per share. 

Updates on its JEA acquisition bid and sale of regulated New York business

On the earnings call, which is scheduled for 9 a.m. EST on Wednesday, Feb. 19, investors can probably expect management to provide an update on two key things: its acquisition bid for the water and wastewater systems owned by Jacksonville, Florida-based JEA, and its proposed sale of its regulated operations in New York state.

If successful in its attempt to buy the JEA systems, American Water will add a new state to its regulated portfolio and get significantly bigger. In 2018, JEA's water and wastewater revenue was nearly 13% of American Water's total revenue. 

O&M efficiency ratio

As always, investors should monitor American Water's operation and maintenance (O&M) efficiency ratio. This ratio, which is for the trailing one-year period, reflects how well the company is controlling costs in its regulated business. The lower the ratio, the better.

In the third quarter, this ratio was 35% for the one-year period through the end of that quarter, an improvement from 35.7% in the year-ago period and also better than the second quarter's 35.4% result. 

2020 guidance

Ahead of its annual investor day in mid-December, American Water announced its 2020 earnings guidance.

For full-year 2020, the company expects adjusted earnings to be in the range of $3.79 to $3.89 per share. Of course, since American Water hasn't yet released its full-year 2019 results, we don't know the year-over-year percentage growth represented by the 2020 outlook. For context, in 2019, the company expects adjusted earnings of $3.56 to $3.64 per share. As a "for instance," if earnings come in at the high end of the company's guidance for both 2019 and 2020, growth would be 6.9% year over year.