American Water Works Company, Inc. (AWK) Stock Valuation — PE Analysis
Regulated Water · NYSE
Current Price
$137.11
PE Ratio (TTM)
23.7x
Intrinsic Value
$153.26
+10.5% margin of safety
COMPETITIVE MOAT
↑Regulated Monopoly Infrastructure
AWK operates essential water and wastewater infrastructure, granted by regulatory bodies. This creates de facto monopolies within its service territories, limiting direct competition.
↑High Capital Intensity & Barriers
Building and maintaining water systems requires immense capital and faces significant regulatory hurdles. This high barrier to entry deters new competitors from entering AWK's established markets.
↑Essential Service Demand
Water is a non-discretionary utility, ensuring consistent demand regardless of economic cycles. This fundamental need provides a stable revenue base for AWK's operations.
INVESTMENT RISKS
↓Regulatory and Political Risk
Changes in regulatory frameworks or political interference can impact pricing, investment decisions, and operational flexibility. Public perception and political will are critical.
↓Environmental and Climate Change
Water scarcity, contamination events, and extreme weather pose operational challenges and require significant investment in resilience and compliance.
↓Interest Rate Sensitivity
As a capital-intensive utility, AWK relies on debt financing. Rising interest rates increase borrowing costs, impacting profitability and the feasibility of new projects.
Base case
AWK base case PE valuation
At a current price of $137.11, the base case PE valuation puts AWK fair value near $153.26 per share. That figure assumes 8.0% yearly earnings growth, a target PE multiple of 24x, and a 10% discount rate.
Intrinsic Value
$153.26
Margin of safety
+10.5%
Expected annual return
+2.3%
Base case assumptions: 8.0% annual earnings growth, 24x target PE, 10% discount rate, 5 year projection. Data as of 2026-07-30.
This base case uses default assumptions and is not financial advice. The fair value changes significantly when the target PE or earnings growth rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the AWK PE valuation
Adjust the target PE, earnings growth, and discount rate to see how the fair value and margin of safety for American Water Works Company, Inc. respond.
Open PE Calculator for AWKCompany Overview
American Water Works Company, Inc. operates across the United States, delivering essential water and wastewater solutions via its various subsidiary companies. Its operations extend to around 1,700 communities situated across 14 states, catering to an active customer base of roughly 3.4 million. The firm caters to a broad spectrum of clients. These include individual households, commercial enterprises (such as food and beverage suppliers, property developers, and energy companies), and both public and private fire service customers. Industrial clients, like large-scale manufacturers, mining, and production facilities, also utilize its services. Furthermore, American Water Works supports public authorities, encompassing government facilities, schools, and universities, alongside other utility providers and community water and wastewater infrastructure. Beyond these, the company extends its water and wastewater provisions to numerous military installations. It also enters into agreements with municipal bodies, predominantly for the management and operation of their water and wastewater facilities, in addition to offering a range of supplementary services. The company's infrastructure is substantial, comprising approximately 80 surface water treatment plants, 480 groundwater treatment plants, and 160 wastewater treatment plants. Its vast network also includes 52,500 miles of mains for transmission, distribution, and collection, alongside 1,100 groundwater wells, 1,700 pumping stations for water and wastewater, 1,300 treated water storage facilities, and 76 dams. Overall, the company delivers drinking water, wastewater management, and ancillary services to roughly 14 million individuals across 24 states. Established in 1886, American Water Works Company, Inc. maintains its headquarters in Camden, New Jersey.
Financial Metrics — AWK PE Stock Valuation Data
PE Ratio (TTM)
23.7x
PEG Ratio
5.72
Earnings Yield
4.20%
ROE (TTM)
10.2%
Revenue/Share (TTM)
$26.96
Dividend Yield
2.46%
Debt/Equity
1.38x
Frequently Asked Questions
What is the PE ratio of AWK?
The trailing twelve-month PE ratio of AWK reflects how much investors pay per dollar of American Water Works Company, Inc.'s earnings. This metric is most useful when compared to Regulated Water peers and the company's own historical range.
Is AWK overvalued based on PE ratio?
AWK's PE of 23.7x combined with a PEG ratio of 5.72 provides a growth-adjusted perspective. A PEG above 2.0 means the P/E is high relative to the earnings growth rate. Keep in mind that PE-based valuation works best for profitable, mature companies — for high-growth or cyclical Regulated Water, a DCF analysis may be more appropriate.
How do I value AWK stock using PE ratio?
To value American Water Works Company, Inc. using PE: (1) Compare the current PE (23.7x) against the Regulated Water median to assess relative pricing, (2) check the PEG ratio (5.72) to adjust for growth expectations, (3) review the 5-year PE range to identify where the stock sits historically, and (4) estimate fair value by multiplying a target PE by forward EPS estimates. This relative approach complements DCF's absolute valuation.
What is the PEG ratio of AWK?
AWK's PEG ratio is 5.72, calculated by dividing the PE ratio (23.7x) by the expected earnings growth rate. A PEG above 2.0 means the P/E is high relative to the expected earnings growth rate. Note that PEG accuracy depends on the reliability of growth estimates.
Should I use PE ratio or DCF for AWK stock valuation?
PE ratio gives a quick relative read — how AWK is priced versus Regulated Water peers. DCF provides an absolute value based on projected free cash flows. For the most reliable valuation, use PE as a quick comparability screen and DCF for a deeper fundamental analysis. Each method has blind spots: PE ignores capital structure and cash flow quality, while DCF is sensitive to growth and discount rate assumptions.
Learn More
- See AWK DCF Valuation → — Intrinsic value via Discounted Cash Flow analysis
- PE Methodology — Step-by-step guide to PE ratio stock valuation
- DCF Methodology — Guide to discounted cash flow analysis
- PE Ratio — Understanding the price-to-earnings ratio
- Intrinsic Value — How to evaluate stock fair value
Related PE Valuations
All Utilities valuationsP/E and DCF value AWK with different methods and assumptions, so the two conclusions can differ. Compare the DCF intrinsic value.
Price as of 2026-07-30. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.