QS Research · Michael Burry's Scion Capital analyst template · 2006
American Water Works Company, Inc. (AWK)
As of 2026-11-11 · 12/15 boxes filled from SEC filings and market data
Report price $150.36 (close 2026-11-10)
Conclusion: WATCH
Conviction medium · base case -13% · downside -15% · upside +30%
At $150.36 AWK trades at 19.2x tax-normalized operating earnings (26.4x GAAP) while TTM FCF is -$1.16B and capex is 118% of EBITDA; I use N59's independent peer-median anchor of $130.14 (-13%) as the base rather than section 13's today-multiple ~$150. The downside at 14.7x P/E on the same $1.56B TTM tax-normalized operating income and 199.10M shares is about $115 (-23%), while the upside at 25.0x is about $196 (+30%), so reward/risk is roughly 1.3:1. That upside is not just a valuation argument: it needs the dated 2026-10-28 2027 guidance and the Essential merger approvals/stipulation to rerate the stock. With base below +30% and upside above +25% at better than 1:1, the call is watch.
Key numbers
- Share price: $150.36
- Market cap: $29.94B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $5.32B
- EV / EBITDA (TTM): 10.7x
- P/E (TTM): 26.4x
- FCF yield: -3.9%
- Price / book: 2.51x
- P/E, operating (tax-normalized) (TTM): 19.2x
- Revenue growth (latest fiscal year): +10.1%
- ROIC (TTM): 11.7%
- WACC: 6.2%
- Economic profit spread: +5.5 pts
The 15 boxes
- ✓ 1. Long-form business notes
American Water is a regulated water and wastewater utility: FY2025 Regulated Businesses revenue was $4,723M, 92% of total, while Other produced $417M, 8%. S24 shows FY2025 revenue of $5.12B, operating income of $1.88B, operating cash flow of $2.06B and capex of $3.13B; TTM to Sep 2026 revenue is $5.32B, operating cash flow is $2.30B and capex is $3.46B. The oldest FY2020 10-K shows 3.5M active customers in 16 states and a $22-25B 10-year capital plan, versus FY2025's 3.6M active customers in 14 states and a $46-48B 10-year capital plan. The pending Essential stock-for-stock merger, announced Oct. 26, 2025, is the key corporate change in the latest report.
- ✓ 2. Competitive advantage
AWK's advantage is a regulated franchise: PUC-set rates are intended to recover prudently incurred costs and provide an opportunity to earn an allowed return on invested capital, and PUC permits/CPCNs are a barrier to entry (S26). The sources name only one competitor, American States Water, and only for MSG (S25); growth by acquisition also faces competition (S26). Operating margins have been stable in the mid-30s and net income to common has grown from $709.0M in FY2020 to $1.14B TTM to Sep 2026, but capex exceeds operating cash flow every year, so the model depends on external capital and regulatory lag is a stated risk (S28, S26).
- ✓ 3. 10-Q takeaways
Q3 2026 operating revenue rose to $1,510M from $1,451M, and nine-month 2026 revenue rose to $4,072M from $3,869M, helped by rate increases but partly offset by weather. Q3 2026 GAAP EPS was flat at $1.94 while adjusted EPS rose to $2.00 from $1.89; 2026 adjusted EPS guidance was narrowed to $6.07-$6.12 and 2027 standalone guidance was initiated at $6.53-$6.63. The 10-Q reports no material risk-factor changes from the 10-K.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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