American Water Works Company, Inc.
American Water Works Company, Inc. Fundamental Analysis
American Water Works Company, Inc. (AWK) shows moderate financial fundamentals with a PE ratio of 22.39, profit margin of 21.17%, and ROE of 10.14%. The company generates $5.2B in annual revenue with moderate year-over-year growth of 9.74%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 33.2/100 based on profitability, valuation, growth, and balance sheet metrics. The F grade reflects weak fundamentals and significant financial concerns.
Fundamental Health Score
We analyze AWK's fundamental strength across five key dimensions:
Efficiency Score
WeakAWK struggles to generate sufficient returns from assets.
Valuation Score
ModerateAWK shows balanced valuation metrics.
Growth Score
ModerateAWK shows steady but slowing expansion.
Financial Health Score
WeakAWK carries high financial risk with limited liquidity.
Profitability Score
WeakAWK struggles to sustain strong margins.
Key Financial Metrics
Is AWK Expensive or Cheap?
P/E Ratio
AWK trades at 22.39 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, AWK's PEG of 7.68 indicates potential overvaluation.
Price to Book
The market values American Water Works Company, Inc. at 2.24 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at 3.30 times EBITDA. This is generally considered low.
How Well Does AWK Make Money?
Net Profit Margin
For every $100 in sales, American Water Works Company, Inc. keeps $21.17 as profit after all expenses.
Operating Margin
Core operations generate 36.48 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $10.14 in profit for every $100 of shareholder equity.
ROA
American Water Works Company, Inc. generates $3.13 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
American Water Works Company, Inc. generates strong operating cash flow of $2.04B, reflecting robust business health.
Free Cash Flow
American Water Works Company, Inc. generates weak or negative free cash flow of $-1.21B, restricting financial flexibility.
FCF Per Share
Each share generates $-6.17 in free cash annually.
FCF Yield
AWK converts -4.87% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
22.39
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
7.68
vs 25 benchmark
P/B Ratio
Price to book value ratio
2.24
vs 25 benchmark
P/S Ratio
Price to sales ratio
4.75
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
1.42
vs 25 benchmark
Current Ratio
Current assets to current liabilities
0.37
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.10
vs 25 benchmark
ROA
Return on assets percentage
0.03
vs 25 benchmark
ROCE
Return on capital employed
0.06
vs 25 benchmark
How AWK Stacks Against Its Sector Peers
| Metric | AWK Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 22.39 | 20.42 | Neutral |
| ROE | 10.14% | 900.00% | Weak |
| Net Margin | 21.17% | 724.00% | Weak |
| Debt/Equity | 1.42 | 1.46 | Neutral |
| Current Ratio | 0.37 | 1.30 | Weak Liquidity |
| ROA | 3.13% | -4801.00% (disorted) | Weak |
AWK outperforms its industry in 0 out of 6 key metrics, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews American Water Works Company, Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
26.32%
Industry Style: Defensive, Dividend, Income
High GrowthEPS CAGR
45.45%
Industry Style: Defensive, Dividend, Income
High GrowthFCF CAGR
34.02%
Industry Style: Defensive, Dividend, Income
High Growth