American Water Works Company, Inc.
Orin's own judgment of how firmly the evidence points one way — not the chance the price goes up.
American Water Works remains a hold at $130.25 as of 2 Oct.
The regulated water utility continues to grow revenue—FY2025 revenue rose 9.7% to $5.14B with EPS up 5.8% to $5.70—but the case is constrained by structurally negative free cash flow of -$1.07B on $3.13B of capex, total debt climbing to $15.9B, and a gross margin collapse to 43.3% in 2025 (from 60.3% in 2024) driven by a negative-gross-profit Q4 2025. The stock has slipped below both its 50-day ($135.81) and 200-day ($131.95) moving averages with an RSI of 38.4, yet still trades at a 12.6% P/E premium and 89.3% P/S premium to the peer median, leaving limited margin of safety for a utility with decelerating quarterly revenue growth (6.2% in Q2 2026 vs. 9.7% in Q3 2025).
What could go wrong
- Gross margin deterioration. FY2025 gross margin fell to 43.3% from 60.3% in FY2024, with Q4 2025 showing negative gross profit of -$171M; if this reflects a structural cost shift rather than a one-time item, earnings quality is impaired.
- Persistent negative FCF and rising debt. Free cash flow has been negative for five consecutive years (-$1.07B in FY2025), and total debt climbed to $15.9B from $14.1B in FY2024, increasing financing cost exposure in a higher-rate environment.
- Valuation premium vs. peers. P/E of 22.53x is 12.6% above the peer median of 20.01x, and P/S of 4.90x is 89.3% above the peer median of 2.59x, limiting upside if growth continues to decelerate.
- Decelerating revenue growth. Quarterly revenue YoY growth slowed from 9.7% in Q3 2025 to 6.2% in Q2 2026, which may not support the current valuation premium.
What would change my mind
Where this comes from: FY25 fundamentals · Q4 2025 fundamentals and results · technicals, 2 Oct · peer comparison. Orin's read on AWK; not advice.
How has the share price moved?
Up 2.3% over twelve months, from $137.99 on 27 Oct 2025 to $141.10 at the Tue 27 Oct 2026 close. Its highest close in that time was $143.23 on 22 Oct 2026; the last close is 1.5% below it.
- Green line: the closing price each trading day.
- Grey line: the average closing price over the last 50 trading days.
- Dashed amber line: the same over the last 200 trading days — a slower, smoother line.
- Bars along the bottom: shares traded each day — green when it closed higher than the day before, rose when lower (the most, 5.5M, on 29 May 2026).
- Flags: the company's filings, on the day they were made (a 10-Q is the quarterly report and a 10-K the annual report; an 8-K reports a major event).
On file
All AWK filingsLargest holders · 13F Q2 2026
Money flow| Filer | Position | Of fund |
|---|---|---|
| BlackRock | $2.7B | 0.0% |
| Wellington Management Group | $2.0B | 0.3% |
| Vanguard Capital Management | $1.7B | 0.0% |
| State Street | $1.6B | 0.0% |
| Vanguard Portfolio Management | $1.5B | 0.1% |
| Geode Capital Management | $684.5M | 0.0% |
| JPMorgan Chase | $664.2M | 0.0% |
| Northern Trust | $478.1M | 0.1% |
| Morgan Stanley | $467.7M | 0.0% |
| Invesco | $452.1M | 0.0% |
88 of the 815 filers we track · quarter ended Q2 2026 · positions, not flows
Insiders, last 24 months: 40 Form 4 filings; open-market trades net −$405K. Of the 40 on hand, 0 were open-market purchases and 1 a sale — the rest are grants, option exercises and tax withholding.
Ask Orin about AWK
Orin answers questions about AWK from its filings, transcripts and numbers — with the source behind every claim. Your own desk starts with 3 free days, card required.
Start 3 free days →How is it priced, against its own past and its sector?
Priced at 24.4× its last 12 months of profit (Tue 27 Oct close) — higher than in 2 of its last 5 fiscal years (middle 27.0×); the typical Utilities company on the NYSE is at 18.5×.
| Measure | Now | Its usual | Sector |
|---|---|---|---|
| P/E | 24.4×below usual | 27.0× | 18.5× |
| P/S | 5.31×below usual | 6.02× | — |
| EV/EBITDA | 15.3×near usual | 15.9× | — |
| P/B | 2.4×below usual | 2.6× | — |
- "Its usual" is the middle of its own last 5 fiscal years.
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
P/S: the company's total market value divided by one year of revenue. Used when there is no profit to measure.
EV/EBITDA: the price of the whole company (its shares plus its debt, minus its cash) divided by one year of operating profit before interest, tax and write-downs.
P/B: the share price divided by the book value per share — what the company owns minus what it owes, as its accounts record it. When book value is tiny, P/B swings wildly and says little.
What do the analysts who cover it publish?
The analysts' average 12-month price target is $140 (from $127 to $153) — 1% below the Tue 27 Oct close price. That is their published opinion, not Orin's.
$140
$127 – $153 · −1% against the last close
- 2 buy or overweight
- 6 hold
- 1 underweight or sell
Price target: the share price an analyst publishes for about 12 months ahead. It is the opinion of the firm that wrote it; the average is across the firms that cover the company.
Overweight / underweight: analysts' rating words: overweight means the firm expects the stock to do better than the others it covers, underweight worse. Their words, not Orin's.
How is it priced next to the companies it is compared to?
Priced at 24.4× its last 12 months of profit; the middle P/E of the 8 companies it is compared to that made a profit is 21.6×.
| Company | Market value | P/E | EV/EBITDA | Gross margin | Net margin | ROE |
|---|---|---|---|---|---|---|
| AWKAmerican Water Works Company, Inc. | $28B | 24.4× | 15.3× | 47.2% | 21.3% | 10% |
| AWRAmerican States Water Company | $4B | 24.3× | 16.6× | 59.9% | 20.4% | 13% |
| CWTCalifornia Water Service Group | $3B | 21.5× | 12.3× | 64.4% | 12.6% | 8% |
| GWRSGlobal Water Resources, Inc. | $225M | 71.0× | 13.1× | 64.8% | 5.2% | 4% |
| HTOH2O America | $3B | 23.3× | 8.0× | 47.0% | 12.5% | 6% |
| MSEXMiddlesex Water Company | $1B | 21.5× | 15.2× | 43.6% | 23.3% | 10% |
| PCYOPure Cycle Corporation | $252M | 17.1× | 12.7× | 57.8% | 43.7% | 10% |
| WTRGEssential Utilities, Inc. | $12B | 21.8× | 15.2× | 53.5% | 21.6% | 8% |
| YORWThe York Water Company | $514M | 19.7× | 19.1× | −282.9% | 401.0% | 9% |
- The list of companies is the data vendor's choice, so it can include a company a person would not have picked.
Market value: the share price times the number of shares — what the whole company is priced at.
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
EV/EBITDA: the price of the whole company (its shares plus its debt, minus its cash) divided by one year of operating profit before interest, tax and write-downs.
Gross margin: the share of each $1 of sales left after the direct cost of making what was sold.
Net margin: the share of each $1 of sales kept as profit after every cost. Below zero, the company lost money.
ROE: return on equity: one year of profit as a share of the shareholders' money in the business (its book value).
Is it priced high or low compared with its own past?
Priced at 24.4× its last 12 months of profit (Tue 27 Oct close). It has no full fiscal year on file since its history starts, so there is nothing of its own to compare with.
- Now24.4×
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
Fiscal year (FY): the company's own 12-month accounting year, which need not match the calendar year.
How has its sector been priced?
Utilities companies on the NYSE were priced at a typical 18.5× their yearly profit (Tue 27 Oct close).
- Now18.5×
- Each year is the middle of that calendar year's daily sector P/E; "Now" is the Tue 27 Oct close figure, the same one in the table above.
Sector P/E: the middle P/E of the companies in the same sector on the same stock exchange, as the data vendor works it out each day.
What does a cash-flow model say a share is worth?
It spends more cash than it brings in, so a cash-flow model gives no usable value (both versions come out below zero).
Discounted cash flow: a model's estimate of what the company is worth today, from the cash it is forecast to make in future years. Small changes in the forecast move it a lot, and it says little about a company that loses money.