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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
American Water Works Company, Inc. (XNYS:AWK) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
AWK
Name:
AMERICAN WATER WORKS COMPANY, INC. (XNYS:AWK)
Sector:
- 290000.00K
Industry:
Utilities�Regulated Water
CEO:
Ms. Susan Story
Total Employees:
6,400
Our Technological Advancement Rating
Our Rating:
A
Technological advancement compared to industry is 263.86% higher
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF AMERICAN WATER WORKS COMPANY, INC.(AWK) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND UTILITIES�REGULATED WATER INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
148.12
One Month Price Target:
$148.49
Six Month Price Target :
$150.34
Likely Price in One Year's Time:
Ticker:
$152.56
Likely Trading Range Today Under (Normal Volatility)
$147.69
Price Upper limit ($) :
$148.69
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$142.13
This week:
$134.72
This month :
$121.32
Other Primary facts
Market Cap:
26.98B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
181.79M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
16.57%
-12.53%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$175.92
$163.12
$120.32
$133.12
Medium risk (<10%) entry points
Buy Call
Sell Call
$158.95
Buy Put:
Sell Put:
$156.22
$137.25
$140.02
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
AWK
Sharpe Ratio:
2.03%
Comparison:
AWK, is amongst the top 40% stocks with highest risk-adjusted returns
Sharpe ratio is 21.83% higher than the industry
& is -10.77% lower than the market/S&P 500 average
Average Returns/Yield of
AWK
Daily returns:
0.05%
Weekly returns:
0.25%
Monthly returns:
0.99%
Yearly returns:
11.13%
Comparison of returns:
Average annual returns/yield (last 3 years) is 6.55% above industry average
Classification:
AWK, is amongst the top 60% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.43
Statistical test of Returns:
AWK has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
1.99%
Weekly Volatility:
4.46%
Monthly Volatility:
8.92%
Yearly Volatility:
30.89%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
1.84%
Volatility in last five trading days has been -7.59% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-4.05%
Weekly VaR:
-9.05%
Monthly VaR:
-18.09%
How Much Can the price of
AWK
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-15%
Worst case (decline):
-62.68%
This translates to price declining to:
$125.26
This translates to price declining to:
$55.28
Severe Crash Probability
Risk of crash in next 6/12 months: High (50-70%)
What is Value at Risk (VaR)?
Risk Fundamentals
AWK is a 27.71% riskier investment compared to the market/S&P 500 & is 9.41% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -11.88% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
AWK
Beta in relation to market/S&P 500--0.45
Expected beta in 1 year's time:
0.582
Expected beta in 3 year's time:
0.823
Unlevered (debt free) Beta:
0.215
Beta in relation to Nasdaq (XNAS):
0.566
Beta in relation to all global stocks::
0.689
Beta Comparison & Analysis
Beta of competitors/peers::
0.556
Beta is -19.76% lower than peers
Average Industry Beta:
0.545
Beta is -18.08% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
7.49%
Sustainable growth rate is 60.08% above industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.056
Alpha is 33.08% above industry average alpha yield
Alpha is 360% higher than market/& is unsustainably high
Analysis of Cost of Capital of
AWK
Equity cost of capital:
0.062
Equity cost of capital is -9.81% below industry mean WACC
Unlevered (without debt) cost of capital:
3.00%
Before-tax cost of debt:
1.88%
After-tax cost of debt:
1.48%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
1.48%
WACC is -28.30% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$21.37
Revenue growth rate per share of (3Y):
3.61
Annual revenue growth rate is -34.47% below industry average
EPS:
$7.08
Expected Annual growth rate of EPS (3Y):
26.36%
Expected future EPS growth rate is 116.30% higher than the Utilities�Regulated Water industry
Free cash flow (FCF) per share:
-
Balance sheet equity growth per share: 33.43%
Equity growth rate per share is 57.62% higher than the industry
Debt per share
$57.35
EBITDA per share
$13.85
Valuation Analysis Today of
AWK
P/E Ratio:
20.75
P/E Ratio of Competitors/Peers:
42.73
P/E ratio is -51.43% lower than main peers & is -25.89% lower than the industry
Stock price/value with industry average P/E ratio: $198.26
AWK is -25.29% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $120.34
Present value of the expected future dividends only: $74.98
P/S (Price to Sales ratio):
6.93
Price to sales ratio is -22.34% below the industry mean
P/B (Price to book value ratio):
3.61
-
-
Net income growth rate (3Y):
121.52%
Net income growth rate is 128.27% higher than the average industry net income growth rate
Dividend Analysis
Dividend payout rate: 8.46%
Dividend yeild: 1.66%
Previous Dividend: $0.66
Previous adjusted dividend: $0.66
Previous Dividend: $2.46
Expected next dividend best case: $0.69
Expected next dividend worst case: $0.62
Average dividend payment (long-term): $0.57
Average dividend increase/decrease (growth rate) % per period: 2.83%
Expected next dividend payment date: 30/08/2022
Expected next dividend record date: 08/08/2022
Expected next dividend declaration date: 26/07/2022
Previous dividend payment date: 06/01/2022
Previous dividend record date: 05/10/2022
Previous dividend declaration date: 27/04/2022
Dividend History:
2022-05-09--$0.66
2021-11-09--$0.60
2021-05-10--$0.60
2022-02-07--$0.60
2021-08-09--$0.60
2021-02-05--$0.55
Dividend growth rate is -63.87% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
139.75%
Net debt to equity ratio:
143.81%
Debt to assets ratio:
40.57%
Net debt to assets ratio:
41.75%
Debt-to-asset ratio is -44.72% below industry average
Ability to repay debt:
Interest coverage ratio:
12.4
Interest coverage ratio is 380.75% more than industry average
Looking forward:
Debt growth rate:
0.00%
-
Debt repayment rate in last quarter: 0.05%
Analysis of Key Statistics
Correlation of price movement with the market:
0.621
Statistical significance of correlation:
AWK has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.56
Stock price is 10.85% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.56
Correlation of price movement with Nasdaq (^IXIC):
0.002
Covariance of price movement with the market:
0.002
Kurtosis
12.5
Returns have severe fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are considerably more likely, compared to assets with normally distributed returns
Skewness of returns:
0.221
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
AWK
Gross Profit Margin Ratio:
222%
Operating Profit Margin Ratio:
31.23%
Operating profit margin is 25.94% higher than the industry
Net Profit Margin Ratio:
222%
Effective Tax Rate:
23.24%
Effective tax rate is 98.23% higher than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
17.27%
Return on equity (ROE) is 64.29% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
5.01%
Return on assets (ROA) is 48.80% higher than the industry
Financial Leverage:
1.7x
Current Ratio:
0.52
Current ratio is -24.82% below industry average
Cash Conversion Cycle (days):
-41.5
Cash conversion cycle is -137.67% below industry average
The remaining useful life of property plant & equipment is: 9.0 years
Stock based compensation to net income ratio:
-
In-depth Efficiency Analysis
Revenue generated per employee:
606.9K
Each employee generates 12% more revenue than industry average revenue per employee
EBITDA generated per employee:
393.4K
Each employee generates 34% more EBITDA than industry average revenue per employee
Profit generated per employee:
201.3K
Each employee generates 31% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
- 45.3K
Each employee generates 448% more free cash flow than industry average revenue per employee
Assets/Capital per employee
3.9M
Each employee generates 448% more free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
AWK
Eversource Energy (XNYS:ES)
WEC ENERGY GROUP, INC. (XNYS:WEC)
CONSOLIDATED EDISON, INC. (XNYS:ED)
PG&E CORPORATION (XNYS:PCG)
EDISON INTERNATIONAL (XNYS:EIX)
FIRSTENERGY CORP. (XNYS:FE)
DTE ENERGY COMPANY (XNYS:DTE)
AMEREN CORPORATION (XNYS:AEE)
PPL CORPORATION (XNYS:PPL)
Current Analyst Ratings
Strong buy�13%
Buy�13%
Hold�38%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
3.88B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
1.72B
2.16B
-
-
-
-
949.00M
949.00M
17.00M
203.00M
637.00M
2.52B
1.21B
1.29B
1.68B
390.00M
1.29B
Statement of Cash Flow
Date:
Period:
158.00M
Differed Income Tax :
- 61000.00K
Stock Based Compensation :
-
Change in Working Capital :
- 71000.00K
Accounts Receivables:
-
Other Working Capital:
45.00M
Other Non-Cash Items:
- 30000.00K
Net Cash Provided by Operating Activities:
154.00M
Investments in PP&E:
- 20000.00K
Net Acquisitions:
- 5000.00K
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
75.00M
-
75.00M
520.00M
71.00M
187.00M
853.00M
21.49B
1.14B
-
-
-
2.21B
24.84B
-
25.69B
175.00M
378.00M
285.00M
-
1.10B
1.65B
10.43B
3.78B
16.59B
-
18.23B
2.00M
1.08B
- 44000.0K
-
March 31, 2022 at 6:00:00 AM
2.67B
7.46B
25.69B
-
10.80B
10.7B
-
184.00M
159.00M
- 5000.00K
-
-
- 109000.00K
- 239000.00K
- 353000.00K
-
- 40000.00K
96.00M
136.00M
154.00M
- 444000.00K
- 290000.00K
Our Proprietary Portfolio Rating
Our Rating:
A+
Price Forecast/Expected Price in Next 5 Years of
AWK
2023
2024
2025
2026
2027
$153.32
$244.45
$251.78
$259.34
$267.12