Fact based stock research
American Water Works (NYSE:AWK)

US0304201033

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For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".

Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".

Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.

Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.

(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).

(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.

American Water Works stock research in summary

amwater.com

ANALYSIS: With an Obermatt Combined Rank of 9 (worse than 91% compared with investment alternatives), American Water Works (Water Utilities, USA) shares have lower financial characteristics compared with similar stocks. Shares of American Water Works are low in value (priced high) with a consolidated Value Rank of 10 (worse than 90% of alternatives) and show below-average growth (Growth Rank of 29) but are safely financed (Safety Rank of 65), which means low debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 9, is a sell recommendation based on American Water Works's financial characteristics. As the company American Water Works's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 10) and low growth (Obermatt Growth Rank of 29), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. In this case, good financing practices (Obermatt Safety Rank of 65) are a positive sign, because it may allow the company to weather challenging times until the hoped-for cash flows materialize. This may be true for high-tech or biotechnology companies with enough cash to sustain prolonged business development. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and unattractive today. In such cases, the Obermatt Method has limited value, as it is based on facts we can observe today. If the facts lie all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that account for a small fraction of a safe portfolio. Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more

Latest Obermatt Ranks


360° View^new
Sentiment Rank^new
Value Rank	10
Growth Rank	29
Safety Rank	65
Combined Rank	9

Country	USA
Industry	Water Utilities
Index	Low Emissions, Diversity USA, SDG 11, SDG 13, SDG 4, SDG 6, SDG 9, Water Tech, S&P 500
Size class	X-Large

This stock has achievements: Top 10 Stock.

26-Dec-2024. Stock data may be delayed. Log in or sign up to get the most recent research.

Further information

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Review the performance ranks of the individual metrics that form each investment strategy.

Research History: American Water Works

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	3	9	12	10
GROWTH
GROWTH	20	37	79	29
SAFETY
SAFETY	26	9	55	65
SENTIMENT
SENTIMENT	n/a	28	63	^new
360° VIEW
360° VIEW	n/a	1	55	^new

Most recent update of the stock research: 26-Dec-2024. Financial reporting date used for calculating ranks: 30-Sep-2024. Stock research history is based on the Obermatt Method. The higher the rank, the better American Water Works is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	3	9	12	10
GROWTH
GROWTH	20	37	79	29
SAFETY
SAFETY	26	9	55	65
COMBINED
COMBINED	3	1	47	9

Last update of combined financial performance: 26-Dec-2024. Stock analysis on combined financial performance: The higher the rank of American Water Works the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 10 (worse than 90% compared with alternatives), American Water Works shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with all four indicators below average for American Water Works. Price-to-Sales is 4 which means that the stock price compared with what market professionals expect for future profits is higher than 96% of comparable companies, indicating a low value concerning American Water Works's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 27, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of American Water Works. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 19 and Dividend Yield, which is lower than 83% of comparable companies, also make the stock more expensive compared with investment alternatives. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 10, is a sell recommendation based on American Water Works's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for American Water Works? One reason may be that the company is simply too popular. If enough people want a particular stock, its price can exceed reasonable levels. This is often the case for companies offering new and exciting products and everybody wants a piece of the action. Should you pay a lot for a hot stock such as American Water Works? It's risky, and even if the stock price continues to grow because of popular demand, it may return to more typical lower levels later. And that return can be sudden and quick, making it impossible for retail investors to exit on time. Sometimes, high prices are deserved. This is the case when it is justified to believe that the company will dominate a market with high profit margins. It has happened in the past for many technology companies and indeed for commercially successful pharmaceutical discoveries. Sometimes they last, sometimes, they get eaten alive. American Water Works may be such a type of stock. That would mean, retail investors should be careful, only considering investing a small part of their wealth in this exciting category and always being ready to lose more than half, if not all of the investment. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision, which is essential in this case, as the financial indicators are inconclusive. ...read more

VALUE METRICS	2021	2022	2023	2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	6	6	7	4
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	16	13	17	19
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	8	12	22	27
DIVIDEND YIELD
DIVIDEND YIELD	33	11	18	17
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	3	9	12	10

Last update of Value Rank: 26-Dec-2024. Stock analysis on value ratios: The higher the rank, the lower the value ratio of American Water Works; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 29 (better than 29% compared with alternatives), American Water Works shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for American Water Works. Sales Growth has a rank of 58 which means that currently, professionals expect the company to grow more than 58% of its competitors. Capital Growth is also above 21% of competitors with a rank of 56. But Profit Growth only has a rank of 21, which means that currently professionals expect the company to grow its profits less than 79% of its competitors. And Stock Returns have also been below average with a rank of only 23. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 29, is a hold recommendation for growth and momentum investors. Profits are sometimes low if the company invests in the future. The positive revenue and capital investment outlook confirms such an interpretation. Both revenues and capital are solid growth indicators, and lower profits in such a case would be encouraging. But the investors see it differently by punishing the share price. Sometimes, Mister Market is not very reliable, because it is not uncommon for it to be volatile. Investors should look out for signs of growth expenditure that could justify low profit growth, and they may also find reasons why recent stock price developments don't confirm the growth outlook of operations. While operating growth indicators are not perfect, they are more reliable indicators for future performance than stock prices that can repeatedly surprise investors. While momentum is a popular investment factor, the value aspect might be the more important one, in the longer term. We recommend analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks to arrive at a 360° View of the stock purchase case, especially since the growth performance is mixed here. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	25	7	69	58
PROFIT GROWTH
PROFIT GROWTH	93	62	85	21
CAPITAL GROWTH
CAPITAL GROWTH	n/a	77	67	56
STOCK RETURNS
STOCK RETURNS	50	25	31	23
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	20	37	79	29

Last update of Growth Rank: 26-Dec-2024. Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of American Water Works.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 65 (better than 65% compared with alternatives), the company American Water Works has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of American Water Works is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, where all three are above average for American Water Works. Leverage is at 56, meaning the company has a below-average debt-to-equity ratio. It has less debt than 56% of its competitors. Refinancing is at a rank of 51, meaning that the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 51% of its competitors. Finally, Liquidity is also good at a rank of 74, which means that the company generates more profit to service its debt than 74% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 65 (better than 65% compared with alternatives), American Water Works has a financing structure that is safer than that of its competitors. These three positive financing indicators signal that the company is less likely to default on its debt obligations. However, it also means that its shareholder returns will be more modest if things go well. A low safety means fewer troubles in downtimes and less upside in good times. Investors may not have a debt issue with American Water Works but they should also compare Obermatt’s Value, Growth, and Sentiment Ranks before making a decision. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	57	16	32	56
REFINANCING
REFINANCING	47	7	77	51
LIQUIDITY
LIQUIDITY	17	62	46	74
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	26	9	55	65

Last update of Safety Rank: 26-Dec-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of American Water Works and the more cash is available to service its debt.

Sentiment Metrics in Detail

SENTIMENT	2021	2022	2023	2024
ANALYST OPINIONS
ANALYST OPINIONS	n/a	14	46	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	57	72	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	43	61	^new
MARKET PULSE
MARKET PULSE	n/a	56	62	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	28	63	^new

Last update of Sentiment Rank: 26-Dec-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for American Water Works.
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