$AWK
Complete Fundamental Analysis of American Water Works Company Inc (AWK)
Executive Summary
American Water Works Company Inc (AWK), listed on the NYSE, is the largest regulated water and wastewater utility in the U.S., operating in 14 states. With a market capitalization of $26.35 billion and a current price of $135.05 (as of September 22, 2025), it shows stable growth driven by infrastructure investments and acquisitions. This analysis covers financial statements, valuation ratios, growth trends, strengths/weaknesses, and peer comparison. Conclusion: The stock is fairly priced, attractive for its stable dividend and low beta, although the high leverage and high PEG (~3.7) suggest caution in high-rate environments.
Review of Financial Statements
Revenues have grown consistently thanks to regulated tariffs and expansion. Net profits are stable, with rising EPS.
Margins
Solid and stable margins, typical of the regulated sector, with gross ~60% and net ~22%, reflecting operational efficiency.
Debt and Liquidity
High but manageable debt (D/E 141%), with growing net worth. Low ROA (3.5%) due to capex-intensive assets.
Dividends
AWK is attractive to income investors, with a yield of 2.45% and a payout of 56.26%, consistent with 18 years of annual increases.
Valuation Ratios
Ratios indicate a premium valuation for stability, with a 22x forward PE aligned with ~6% growth. A solid 10.4% ROE for utilities.
Beta: 0.68. 52-week range: $118.74 - $155.50.
Growth Trends
Last 5 Years
Revenue growth CAGR ~8% (from ~3.65B in 2020 to 4.94B in 2024), driven by acquisitions and fees. EPS CAGR ~6.2%, stable despite capex.
Current Trend (2025)
Estimates: Revenue of 4.97B in 2025 (+6% YoY), 5.29B in 2026 (+6.5%). EPS growth of 5.9% in 2025 and 6.9% in 2026, with investments of 3.3B in 2025.
Main Strengths and Weaknesses
Strengths
- Market Leadership: Largest water utility in the US, with stable regulated operations (~90% revenue).
- Robust Financial Growth: Revenue and EPS on the rise > industry, with debt well covered by EBITDA.
- Reliable Dividend: Attractive yield and sustainable payout, with a history of increases.
Weaknesses
- High Debt: D/E 141%, sensitive to interest rates and capex (~17-18B in 2025-2029).
- Regulatory Dependency: Tariff approvals may be delayed, impacting margins.
- Operational Vulnerability: Exposure to climate events and increasing infrastructure costs.
Comparison with Main Competitors
Competitors: Essential Utilities (WTRG), American States Water (AWR), California Water Service (CWT). AWK leads in scale and EBITDA, but with more debt.
Analysis: AWK excels in size and growth, with superior margins, but CWT trades at a high PE due to its smaller scale. WTRG and AWR are similar in stability, but AWK justifies a premium for geographic diversification.
Conclusion: Overall Assessment
AWK is fairly priced. Its forward PE (22x) aligns with ~6% growth and solid ROE, supported by an attractive dividend. However, its high D/E and ~3.7 PEG indicate relative overvaluation if rates rise. Recommendation: Hold for defensive investors; upside potential 5-10% (average target $141) by 2025 guidance.
The content of this analysis is for informational purposes only and does not constitute an investment recommendation.
Complete Fundamental Analysis of American Water Works Company Inc (AWK)
Executive Summary
American Water Works Company Inc (AWK), listed on the NYSE, is the largest regulated water and wastewater utility in the U.S., operating in 14 states. With a market capitalization of $26.35 billion and a current price of $135.05 (as of September 22, 2025), it shows stable growth driven by infrastructure investments and acquisitions. This analysis covers financial statements, valuation ratios, growth trends, strengths/weaknesses, and peer comparison. Conclusion: The stock is fairly priced, attractive for its stable dividend and low beta, although the high leverage and high PEG (~3.7) suggest caution in high-rate environments.
Review of Financial Statements
Income and ProfitsRevenues have grown consistently thanks to regulated tariffs and expansion. Net profits are stable, with rising EPS.
| Year | Revenue (M USD) | B. Bruto (M USD) | I. Operativo (M USD) | B. Neto (M USD) | EPS (USD) |
|---|---|---|---|---|---|
| 2024 | 4942 | 2979 | 1803 | 1083 | 5.55 |
| 2023 | 4684 | 2826 | 1718 | 1051 | 5.39 |
| 2022 | 4234 | 2514 | 1504 | 944 | 4.90 |
| 2021 | 3792 | 2203 | 1273 | 820 | 4.51 |
Margins
Solid and stable margins, typical of the regulated sector, with gross ~60% and net ~22%, reflecting operational efficiency.
| Year | Gross M. (%) | Operating M. (%) | Net M. (%) |
|---|---|---|---|
| 2024 | 60.3 | 36.5 | 21.9 |
| 2023 | 60.3 | 36.7 | 22.4 |
| 2022 | 59.4 | 35.5 | 22.3 |
| 2021 | 58.1 | 33.6 | 21.6 |
Debt and Liquidity
High but manageable debt (D/E 141%), with growing net worth. Low ROA (3.5%) due to capex-intensive assets.
Year | Assets (M USD) | Liabilities (M USD) | Equity (M USD) | Debt (M USD) |
|---|---|---|---|---|
| 2024 | 32830 | 22498 | 10332 | 14110 |
| 2023 | 30298 | 20501 | 9797 | 12442 |
| 2022 | 27787 | 20094 | 7693 | 12452 |
| 2021 | 26075 | 18777 | 7298 | 11062 |
Dividends
AWK is attractive to income investors, with a yield of 2.45% and a payout of 56.26%, consistent with 18 years of annual increases.
Valuation Ratios
Ratios indicate a premium valuation for stability, with a 22x forward PE aligned with ~6% growth. A solid 10.4% ROE for utilities.
Ratio | Value |
|---|---|
| Current Price (USD) | 135.05 |
| Cap. Mercado (B USD) | 26.35 |
| PER Trailing | 24.34 |
| PER Forward | 22.03 |
| Price/Book | 2.47 |
| LENGTH (%) | 3.50 |
| ROE (%) | 10.40 |
| Dividend Yield (%) | 2.45 |
| D/E (%) | 141.10 |
Beta: 0.68. 52-week range: $118.74 - $155.50.
Growth Trends
Last 5 Years
Revenue growth CAGR ~8% (from ~3.65B in 2020 to 4.94B in 2024), driven by acquisitions and fees. EPS CAGR ~6.2%, stable despite capex.
Current Trend (2025)
Estimates: Revenue of 4.97B in 2025 (+6% YoY), 5.29B in 2026 (+6.5%). EPS growth of 5.9% in 2025 and 6.9% in 2026, with investments of 3.3B in 2025.
Main Strengths and Weaknesses
Strengths
- Market Leadership: Largest water utility in the US, with stable regulated operations (~90% revenue).
- Robust Financial Growth: Revenue and EPS on the rise > industry, with debt well covered by EBITDA.
- Reliable Dividend: Attractive yield and sustainable payout, with a history of increases.
Weaknesses
- High Debt: D/E 141%, sensitive to interest rates and capex (~17-18B in 2025-2029).
- Regulatory Dependency: Tariff approvals may be delayed, impacting margins.
- Operational Vulnerability: Exposure to climate events and increasing infrastructure costs.
Comparison with Main Competitors
Competitors: Essential Utilities (WTRG), American States Water (AWR), California Water Service (CWT). AWK leads in scale and EBITDA, but with more debt.
| Metric | AWK | WTRG (Rev 3.8B) | HOUR (Rev 0.6B) | CWT (Rev 0.8B) |
|---|---|---|---|---|
| PE Forward | 22.0 | 20 | 25 | 50 |
| ROE (%) | 10.4 | 9.0 | 10.0 | 8.0 |
| Growth 5Y CAGR (%) | 8 | 6 | 6 | 5 |
| Net Margin (%) | 22 | 20 | 18 | 15 |
| D/E (%) | 141 | 120 | 100 | 80 |
Analysis: AWK excels in size and growth, with superior margins, but CWT trades at a high PE due to its smaller scale. WTRG and AWR are similar in stability, but AWK justifies a premium for geographic diversification.
Conclusion: Overall Assessment
AWK is fairly priced. Its forward PE (22x) aligns with ~6% growth and solid ROE, supported by an attractive dividend. However, its high D/E and ~3.7 PEG indicate relative overvaluation if rates rise. Recommendation: Hold for defensive investors; upside potential 5-10% (average target $141) by 2025 guidance.
The content of this analysis is for informational purposes only and does not constitute an investment recommendation.