AWK
American Water Works Company, Inc.
$135.90
Stable Earnings Power
85%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Overvalued
Trading 49.0% above fair value
You pay
$135.90
Bear
$79.80
Fair
$91.20
Bull
$102.60
Bear
$79.80
-41.3%
$5.70 × 14x P/E
Fair
$91.20
-32.9%
$5.70 × 16x P/E
Bull
$102.60
-24.5%
$5.70 × 18x P/E
Adjust Assumptions
16.0x
5.7$
Key Value Driver
Normalized P/E multiple (16x base case)
Implied Market Multiple
23.8x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (30 analysts)
$140.50
Divergence from AlphaVal
35%
Summary
Applying a 16x P/E to adjusted EPS of $5.70, the base-case value is $91.20 per share. DDM cross-check: $243.12.
Warnings
Dividend-based valuation: $243.12 (above our primary estimate by 167%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $140.50 (from 30 analysts). Our estimate is 35% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples