American Water Works Company, Inc. (AWK) Stock Valuation — PE Analysis
Regulated Water · NYSE
Current Price
$127.29
PE Ratio (TTM)
22.5x
Intrinsic Value
$142.44
+10.6% margin of safety
COMPETITIVE MOAT
↑Regulated Monopoly Infrastructure
AWK operates as a regulated monopoly, owning essential water and wastewater infrastructure. This creates high barriers to entry for competitors, ensuring a stable customer base and predictable revenue streams.
↑Scale and Geographic Diversification
As the largest regulated water utility in the U.S., AWK benefits from significant economies of scale. Its operations across multiple states provide diversification, mitigating risks associated with localized economic downturns or regulatory changes.
↑Essential Service Demand
Water is a fundamental necessity, creating inelastic demand for AWK's services. This resilience ensures consistent revenue generation regardless of economic cycles, as customers prioritize access to clean water.
INVESTMENT RISKS
↓Regulatory and Rate Case Uncertainty
AWK's profitability is subject to regulatory approvals for rate increases. Unfavorable decisions or lengthy rate case processes can negatively impact earnings and investment returns.
↓Aging Infrastructure and Capital Expenditures
The company must continuously invest in maintaining and upgrading its extensive, often aging, infrastructure. Significant capital needs can strain financial resources and require substantial rate increases.
↓Climate Change and Water Scarcity
Increasingly frequent droughts and extreme weather events pose risks to water supply and quality. AWK must adapt to these challenges, potentially incurring higher operational and capital costs.
Base case
AWK base case PE valuation
A base case PE valuation for AWK estimates a fair value of about $142.44 per share, against a current price of $127.29. The model assumes 7.5% annual earnings growth, a 23x target PE multiple, and a 10% discount rate.
Intrinsic Value
$142.44
Margin of safety
+10.6%
Expected annual return
+2.3%
Base case assumptions: 7.5% annual earnings growth, 23x target PE, 10% discount rate, 5 year projection. Data as of 2026-06-15.
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)
22.5x
PEG Ratio
7.73
Earnings Yield
4.44%
ROE (TTM)
10.1%
Revenue/Share (TTM)
$26.69
Dividend Yield
2.65%
Debt/Equity
1.42x
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 22.5x combined with a PEG ratio of 7.73 provides a growth-adjusted perspective. A PEG above 2.0 suggests AWK may be richly valued even accounting for growth. 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 (22.5x) against the Regulated Water median to assess relative pricing, (2) check the PEG ratio (7.73) 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 7.73, calculated by dividing the PE ratio (22.5x) by the expected earnings growth rate. A PEG above 2.0 often signals the stock is priced aggressively relative to its growth trajectory. 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 2026-06-15. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.