How Does This Utility Operate?
American Water Works Co Inc provides water and wastewater services in the US. The business operates regulated utility systems that deliver drinking water and manage wastewater for communities and customers. Its operations center on maintaining and expanding water infrastructure, including treatment and distribution networks. The company’s scale is reflected in a market capitalization of about USD 25.3 billion.
Can Earnings Support Heavy Capital Spending?
FundamentalsIn USD-reported results for 2025, revenue reached USD 5.14 billion, alongside EBIT of USD 1.88 billion and net income of USD 1.11 billion. Against that earnings base, the balance sheet carried USD 14.4 billion of total debt while cash was USD 98.0 million.
Capital intensity dominated the year: capex was USD 3.13 billion, with depreciation and amortization at USD 894.0 million. With those pieces combined, the cash flow proxy came in at -USD 664.0 million. Revenue growth for the year was 9.7%, while profitability held at a 36.48% operating margin and a 21.17% net profit margin on a trailing basis.
Is The Stock Priced Below Fair Value?
DCF / MultiplesAt USD 129.64, the stock trades below a DCF fair value range that runs from USD 116.33 in a weaker scenario to USD 181.21 centrally and USD 263.44 in a stronger outcome. Headline pricing also sits around 22.79x trailing earnings and 14.43x EV/EBITDA, with a price-to-sales multiple of 4.82.
Leverage Control Is Essential
TakeawayThe business lives and dies by funding its capex program. Debt is already large, and cash is thin. The case works if earnings keep covering reinvestment needs. It breaks if capex keeps outrunning cash generation. Resilience hinges on keeping leverage from creeping higher.