AWK
American Water Works Company, Inc.
$125.07
Stable Earnings Power
85%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 21.0% above fair value
You pay
$125.07
Bear
$90.42
Fair
$103.34
Bull
$116.26
Bear
$90.42
-27.7%
$5.70 × 14x P/E
Fair
$103.34
-17.4%
$5.70 × 16x P/E
Bull
$116.26
-7.0%
$5.70 × 18x P/E
Key Value Driver
Normalized P/E multiple (16x base case)
Implied Market Multiple
21.9x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $131.67 from 30 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $103.34 per share.
Warnings
Dividend-based valuation: $242.17 (above our primary estimate by 166%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $131.67 (from 30 analysts). Our estimate is 31% 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