American Water Works Company, Inc. (AWK)

FairStock Score: 46/100 — MIXED

Key Financials

AI Analysis

AI-generated, general educational analysis — not personal investment advice.

As a value investor, I start with the business. American Water Works sells an essential service—water and wastewater—through regulated utilities, with 7,000 employees and many treatment plants. That can be a durable franchise because customers rarely stop needing water and regulators generally allow a fair return. The filed figures show consistency: in fiscal Q2 2026, the quarter ended 2026-06-30, revenue was $1.4B and net income $315.0M; a year earlier in fiscal Q2 2025, revenue was $1.3B and net income $289.0M. For all FY2025, revenue was $5.1B and diluted EPS $5.69, up from FY2023 revenue of $4.2B and diluted EPS $4.90. The latest quarter's margin was about 23%. FairStock's Piotroski score of 8/9 suggests decent accounting strength, and its Lynch category is STALWART—steady growth—which fits. But the balance sheet and cash flow give me pause. FairStock reports a debt-to-equity ratio of 1.38, ROCE of 3.52%, and trailing free cash flow of -$1.2B—a -4.7% FCF yield. Utilities are capital-hungry, but negative free cash flow means growth depends on outside financing. Valuation is the bigger issue. At the 2026-10-13 close of $130.05, FairStock's P/E is 22.50, P/B is 2.22, PEG is 2.50, and EV/EBITDA is 13.79. Graham's number is $87.37, leaving a margin of safety of -48.85%; Altman Z of 0.77 is weak. The dividend yield of 2.63% and beta of 0.58 are attractive for income and stability, but I want a larger discount before calling it a bargain. It is a stalwart, not a steal.

In plain English: American Water Works provides water and wastewater service to homes, businesses, and military bases in the United States. The business looks steady and profitable, with customers who need water every day, but it carries a lot of debt and spends heavily on its systems. At the recent price, the stock looks expensive compared with the company's earnings and accounting value.

The full AI analysis, bull and bear case and key monitorables are in FairStock Pro.

Data as of 2026-10-13 close · note generated 2026-10-15 · model deepseek-flash

Sources (SEC EDGAR): fiscal Q2 2026 10-Q (period ended 2026-06-30) · fiscal Q1 2026 10-Q (period ended 2026-03-31) · fiscal Q3 2025 10-Q (period ended 2025-09-30) · fiscal Q2 2025 10-Q (period ended 2025-06-30) · FY2025 10-K (period ended 2025-12-31) · FY2024 10-K (period ended 2024-12-31) · FY2023 10-K (period ended 2023-12-31)

Fundamentals from company filings and market-data providers; prices are end-of-day, not real-time. AI-generated analysis is general and educational — not personal investment advice. Scoring methodology · Score test · Disclaimer