American Water Works Company, Inc. (AWK) Stock Analysis
Score DBlue Chip · Grade F · Bearish
$124.37
$129.56
+4.2%
4/10
F
Blue Chip
Investment Thesis
Low quantitative score: Low quality, stretched valuation, or poor risk/reward.
For New Investors
Quantitative score: weak
For Current Holders
Quantitative score: low
Buy if
- Price drops 15-20% (improves asymmetry)
- Bull scenario catalysts materialize
- Market-wide correction creates opportunity
Sell if
- Bear scenario triggers occur
- Quality metrics deteriorate (ROIC declining)
- Better alternatives emerge
Valuation
Fair Value estimate: $129.56 (+4.2%). Slightly undervalued.
PEG-Based EPS
$140.97
FCF DCF Model
$122.60
EV/EBITDA
$130.31
Blended Fair Value
$129.56
Confidence
High
Methods
PEG-Based EPS, FCF 2-Stage DCF, EV/EBITDA
Quality Analysis
38/120 points
Low Quality
ROE (3Y Avg)
10.0%
ROIC-WACC Spread
-1.0%
D/E Ratio
1.5x
Current Ratio
0.5x
Interest Coverage
3x
FCF Positive Years
0/3
Quality Flags
- ROIC spread: -1.0pp (got 0/25 pts)
- FCF positive only 0/3 years (0/20 pts)
- Leverage: D/E 1.5x (8/15 pts)
- Liquidity: Current Ratio 0.46 (0/10 pts)
- Volatile gross margins: std dev 7.0pp (need <3.0pp)
Market Sentiment
Wall Street Consensus
$131.00
+5.3% Upside
11 analysts
Range: $124.00 — $137.00
Rating: Hold
Our model is more cautious than Wall Street.
Trend & Technical
Price ($124.35) is 6.1% below SMA 200 ($132.37). Bearish trend. Caution on entry.
Tech Score 21/100 — Very weak technicals. Multiple bearish signals active.
Risk & Reward
Asymmetry Ratio
3.04:1
Expected Return
+6.2%
Bull Upside
+34.1%
Bear Downside
-11.2%
Excellent asymmetry: 3.04:1 ratio. Upside significantly outweighs downside.
Verdict: Very Favorable
Scenario Analysis
Bear
Base
Bull
Buy Zone & Action Plan
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AI Executive Summary
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Technical Analysis
RSI, MACD, moving averages, trend signals, and momentum indicators.
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Frequently Asked Questions
What is the fair value of AWK?
Based on our multi-method conviction analysis, the estimated fair value of American Water Works Company, Inc. (AWK) is $129.56. This is calculated by blending PEG-Based EPS, FCF 2-Stage DCF, EV/EBITDA and applying a quality premium of 0% based on the company's fundamentals. The confidence level of this estimate is high.
Is AWK a buy, sell, or hold?
AWK currently has a AVOID rating with a conviction score of 4/10. Low quantitative score: Low quality, stretched valuation, or poor risk/reward. Quantitative score: weak.
Is AWK a high-quality stock?
American Water Works Company, Inc. has a quality grade of F (38/120 points), rated as Low Quality. Key metrics include ROE of 10.0%, ROIC-WACC spread of -1.0%, and D/E ratio of 1.5x.
What type of stock is AWK?
AWK is classified as a "blue_chip" in our framework. Mature growth: 8.2%, Moderate growth: 8.2%, Dividend paying: 2.7%, Consistent FCF: 3/3 years positive, Proven scale (compounder): $24.3B
What do Wall Street analysts say about AWK?
11 Wall Street analysts have a consensus price target of $131.00 for AWK, representing +5.3% upside. Targets range from $124.00 to $137.00. The consensus recommendation is "Hold". Our model is more cautious than Wall Street.
What are the risks of investing in AWK?
The risk/reward asymmetry ratio for AWK is 3.04:1, rated as Very Favorable. Excellent asymmetry: 3.04:1 ratio. Upside significantly outweighs downside. The expected return is +6.2%, with bull case upside of +34.1% and bear case downside of -11.2%.
What is the current trend for AWK?
AWK is in a bearish trend. Price ($124.35) is 6.1% below SMA 200 ($132.37). Bearish trend. Caution on entry. The technical score is 21/100.
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Last updated: May 19, 2026 · Framework version 3.7
This analysis is for informational purposes only and should not be considered financial advice. Always do your own research before making investment decisions.