American Water Works
🇺🇸 AWK · NYSE/NASDAQ · US0304201033
Utilities
USD 138.14 price at analysis
Scores
Key Metrics
Powered by EODHDP/E (TTM)
24.2
P/E (Price-to-Earnings)Shows how much investors pay for each $1 of profit. We display the TTM P/E (Trailing Twelve Months) which uses actual earnings from the last 4 quarters. This is more reliable than Forward P/E which uses analyst estimates.
Calculation: 138.14 ÷ 5.70 = 24.2
TTM period through: 2025-12-31
Forward P/E (estimated): 22.8
Based on analyst estimates
Reference: Provider P/E (Trailing): 24.3
Yield (Fwd)
2.40%
Dividend YieldThe Forward yield (Fwd) shows the next announced annual dividend / current price — what you'd earn going forward. The Trailing yield (TTM) in the tooltip shows dividends actually paid in the last 12 months. Forward is shown as primary because it reflects the company's current commitment to shareholders.
Trailing Yield (TTM): 2.37%
Net Debt/EBITDA (TTM)
5.7x
Latest quarter: 30.6x
Net Debt / EBITDAA leverage ratio showing how many years of EBITDA (earnings before interest, taxes, depreciation, and amortization) it would take to repay net debt. EBITDA approximates operating cash generation. Lower ratios (e.g., <3x) are generally safer; higher (e.g., >5x) may indicate more financial risk.
TTM through: 2025-12-31
Latest quarter (2025-12-31): 30.6x
The quarterly value can spike when quarterly EBITDA is very low (e.g., one-time charges).
Quick guide: <2x manageable, >4x can be risky (sector-dependent).
Payout (Fwd)
58.1%
Payout RatioDividends as a percentage of earnings. The Forward payout (Fwd) uses the announced dividend divided by actual past earnings (TTM) — it tells you if the company can afford what it promised. Very high payouts can be risky, especially if profits fall.
Announced dividend / actual earnings (TTM)
Payout (TTM): 57.0%
Cash Flow Payout (TTM): 30.7%
FCF Coverage (TTM): -1.69x
ROE
10.5%
ROE (Return on Equity)A profitability measure: how much profit is generated from shareholders’ equity. Higher isn’t always better if it comes from high debt.
EV/EBITDA
14.6x
EV/EBITDAA valuation ratio that compares total business value (including debt) to EBITDA. Lower can mean cheaper, but context matters.
Summary
American Water Works is a premier regulated water utility operating as a pure-play monopoly in the ultimate essential service sector. While the company boasts an exceptional economic moat and a flawless dividend growth history, the current premium valuation (P/E 24.2) and sub-3% yield offer limited upside. Existing shareholders should maintain positions given the outstanding business quality, but new investors may want to wait for a better entry point with a higher margin of safety.
Sector Context
American Water Works is the largest publicly traded water and wastewater utility in the United States, operating regulated systems that provide essential drinking water to millions of customers. While water utilities represent the ultimate essential service with unparalleled monopoly pricing power, they require massive, continuous capital expenditures to maintain aging infrastructure, leading to structurally high debt levels and frequent negative free cash flow.
📊 Strategy Analysis
- • Operates as a pure-play water utility monopoly in an essential service sector, providing highly predictable and recession-resistant cash flows.
- • Exceptional dividend history with a flawless 10-year growth track record (9.3% CAGR) and a sustainable earnings payout ratio of 58%.
- • Consistent long-term revenue growth trajectory supported by an outstanding EBITDA margin of 53.9%.
⚠ What to Watch
- • Current valuation is highly stretched with a TTM P/E of 24.25, far exceeding the strategy's target range of 8-15x and trading well above the estimated monopoly fair value upper bound of $114.
- • The 2.37% dividend yield falls short of the 3% minimum threshold required for income-focused portfolios.
- • Elevated Net Debt/EBITDA of 5.7x and persistent negative free cash flow (-$385M) reflect heavy infrastructure capital expenditure requirements, necessitating ongoing capital market access.
📊 Historical Trends (10 Years)
Powered by EODHDThese charts show how key metrics have evolved over the past decade, helping you identify if the company is improving or deteriorating.
Debt Evolution (Net Debt / EBITDA)
Lower values are better. A declining trend indicates the company is reducing its debt (deleveraging).
Revenue & Earnings Growth
Consistent growth in revenueRevenue
The money a company brings in from selling its products or services. It’s the top line before costs. (blue) and earningsEarnings (Profit)
What’s left after expenses. Positive earnings mean the business made a profit; negative means a loss. (green) indicates a healthy business. Look for upward trends and recoveries after temporary dips.
Dividend Sustainability (FCF vs Dividends Paid)
Free cash flowFree Cash Flow
Cash left after the company pays for running the business and maintaining it. Often used to fund dividends, pay debt, or buy back shares. (FCFFCF (Free Cash Flow)
Short for Free Cash Flow: cash left after operating needs and maintenance spending., blue) should cover dividends paidDividends Paid
Cash the company paid out to shareholders. It’s not guaranteed and can change over time. (green). If dividends consistently exceed FCFFCF (Free Cash Flow)
Short for Free Cash Flow: cash left after operating needs and maintenance spending., the dividend may be at risk.
Analysis date: 2026-04-04
Disclaimer: This information is for educational purposes only. Not financial advice.