American Water Profitability Analysis

AWK Stock  USD 121.50  3.66  3.11%   
Considering American Water's profitability and operating efficiency indicators, American Water's profitability may be sliding down. It has an above-average probability of reporting lower numbers next quarter. Profitability indicators assess American Water's ability to earn profits and add value for shareholders.
 
Net Income  
First Reported
1985-09-30
Previous Quarter
323 M
Current Value
171 M
Quarterly Volatility
119.1 M
 
Black Monday
 
Oil Shock
 
Dot-com Bubble
 
Housing Crash
 
Credit Downgrade
 
Yuan Drop
 
Covid
At this time, American Water's Price To Sales Ratio is quite stable compared to the past year. Price Sales Ratio is expected to rise to 6.32 this year, although the value of Operating Cash Flow Sales Ratio will most likely fall to 0.22. At this time, American Water's Operating Income is quite stable compared to the past year. Income Before Tax is expected to rise to about 1.3 B this year, although the value of Net Income From Continuing Ops will most likely fall to about 635.3 M.
Current ValueLast YearChange From Last Year 10 Year Trend
Gross Profit Margin0.420.5938
Way Down
Very volatile
Net Profit Margin0.230.223
Sufficiently Up
Slightly volatile
Operating Profit Margin0.370.3552
Sufficiently Up
Slightly volatile
Pretax Profit Margin0.140.2825
Way Down
Slightly volatile
Return On Assets0.02410.0312
Significantly Down
Slightly volatile
Return On Equity0.08790.0964
Significantly Down
Slightly volatile
For American Water profitability analysis, we use financial ratios and fundamental drivers that measure the ability of American Water to generate income relative to revenue, assets, operating costs, and current equity. These fundamental indicators attest to how well American Water Works utilizes its assets to generate profit and value for its shareholders. The profitability module also shows relationships between American Water's most relevant fundamental drivers. It provides multiple suggestions of what could affect the performance of American Water Works over time as well as its relative position and ranking within its peers.
  
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Is American Water's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of American Water. If investors know American will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about American Water listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth
0.086
Dividend Share
2.778
Earnings Share
4.9
Revenue Per Share
21.938
Quarterly Revenue Growth
0.108
The market value of American Water Works is measured differently than its book value, which is the value of American that is recorded on the company's balance sheet. Investors also form their own opinion of American Water's value that differs from its market value or its book value, called intrinsic value, which is American Water's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because American Water's market value can be influenced by many factors that don't directly affect American Water's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between American Water's value and its price as these two are different measures arrived at by different means. Investors typically determine if American Water is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, American Water's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.

American Water Works Market Capitalization vs. Number Of Shares Shorted Fundamental Analysis

Comparative valuation techniques use various fundamental indicators to help in determining American Water's current stock value. Our valuation model uses many indicators to compare American Water value to that of its competitors to determine the firm's financial worth.
American Water Works is rated second in number of shares shorted category among related companies. It is number one stock in market capitalization category among related companies creating about  9,131  of Market Capitalization per Number Of Shares Shorted. . Comparative valuation analysis is a catch-all model that can be used if you cannot value American Water by discounting back its dividends or cash flows. This model doesn't attempt to find an intrinsic value for American Water's Stock . Still, instead, it compares the stock's price multiples to a benchmark or nearest competition to determine if the stock is relatively undervalued or overvalued. The reason why the comparable model can be used in almost all circumstances is due to the vast number of multiples that can be utilized, such as the price-to-earnings (P/E), price-to-book (P/B), price-to-sales (P/S), price-to-cash flow (P/CF), and many others. The P/E ratio is the most commonly used of these ratios because it focuses on the American Water's earnings, one of the primary drivers of an investment's value.

American Market Capitalization vs. Number Of Shares Shorted

Number of Shares Shorted is the total amount of shares that are currently sold short by investors. When a stock is sold short, the short seller assumes the responsibility of repurchasing the stock at a lower price. The speculator will make money if the stock goes down in price or will experience a loss if the stock price goes up.

American Water

Shares Shorted

 = 

Shorted by Public

+

by Institutions

 = 
2.51 M
If a large number of investors decide to short sell an equity instrument within a small period of time, their combined action can significantly affect the price of the stock.
Market Capitalization is the total market value of a company's equity. It is one of many ways to value a company and is calculated by multiplying the price of the stock by the number of shares issued. If a firm has one type of stock its market capitalization will be the current market share price multiplied by the number of shares. However, if a company has multiple types of equities then the market cap will be the total of the market caps of the different types of shares.

American Water

Market Cap

 = 

Shares Outstanding

X

Share Price

 = 
22.95 B
In most publications or references market cap is broken down into the mega-cap, large-cap, mid-cap, small-cap, micro-cap, and nano-cap. Market Cap is a measurement of business as total market value of all of the outstanding shares at a given time, and can be used to compare different companies based on their size.

American Market Capitalization vs Competition

American Water Works is number one stock in market capitalization category among related companies. Market capitalization of Utilities industry is presently estimated at about 38.58 Billion. American Water totals roughly 22.95 Billion in market capitalization claiming about 59% of Utilities industry.
Capitalization  Valuation  Revenue  Total debt  Workforce

American Water Profitability Projections

The most important aspect of a successful company is its ability to generate a profit. For investors in American Water, profitability is also one of the essential criteria for including it into their portfolios because, without profit, American Water will eventually generate negative long term returns. The profitability progress is the general direction of American Water's change in net profit over the period of time. It can combine multiple indicators of American Water, where stable trends show no significant progress. An accelerating trend is seen as positive, while a decreasing one is unfavorable. A rising trend means that profits are rising, and operational efficiency may be rising as well. A decreasing trend is a sign of poor performance and may indicate upcoming losses.
Last ReportedProjected for 2024
Accumulated Other Comprehensive Income-26 M-27.3 M
Operating Income1.5 B1.6 B
Income Before Tax1.2 B1.3 B
Total Other Income Expense Net79 M83 M
Net Income944 M991.2 M
Income Tax Expense252 M164.3 M
Net Income From Continuing Ops944 M635.3 M
Non Operating Income Net Other193.2 M101.3 M
Net Income Applicable To Common Shares943 M598.9 M
Interest Income73 M69.3 M
Net Interest Income-387 M-406.4 M
Change To Netincome73.6 M69.9 M
Net Income Per E B T 0.79  0.59 

American Profitability Driver Comparison

Profitability drivers are factors that can directly affect your investment outlook on American Water. Investors often realize that things won't turn out the way they predict. There are maybe way too many unforeseen events and contingencies during the holding period of American Water position where the market behavior may be hard to predict, tax policy changes, gold or oil price hikes, calamities change, and many others. The question is, are you prepared for these unexpected events? Although some of these situations are obviously beyond your control, you can still follow the important profit indicators to know where you should focus on when things like this occur. Below are some of the American Water's important profitability drivers and their relationship over time.

American Water Profitability Trends

American Water profitability trend refers to the progression of profit or loss within a business. An upward trend means that American Water's profit has generally increased over time, and a downward profitability trend means profits are declining. Recognizing problems early in profitability trends allows investors to address revenue and cost issues in advance. Investors and analysts usually monitor three types of profitability trends: gross, operating, and net. Gross profit is the difference between revenue and costs of goods sold. Operating profit is American Water's gross profit minus its overhead. After you account for other unusual revenue, expenses, and costs, you get net profit. Gross profit trends are often a good indicator of future profitability. If you have high gross profit margins, you have a better chance to cover overhead and make money.

American Water Profitability Drivers Correlations

One of the toughest challenges investors face today is learning how to quickly synthesize and read into endless financial statements and information provided by the company, SEC reporting, and various external parties. Understanding the correlation between American Water different financial indicators related to revenue and profit generation helps investors identify and prioritize their investing strategies towards American Water in a much-optimized way. Analyzing correlations between profit drivers that are directly associated with dollar figures is the most effective way to break down American Water's future profitability.

Use American Water in pair-trading

One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if American Water position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in American Water will appreciate offsetting losses from the drop in the long position's value.

American Water Pair Trading

American Water Works Pair Trading Analysis

The ability to find closely correlated positions to American Water could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace American Water when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back American Water - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling American Water Works to buy it.
The correlation of American Water is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as American Water moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if American Water Works moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for American Water can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.
Pair CorrelationCorrelation Matching

Use Investing Themes to Complement your American Water position

In addition to having American Water in your portfolios, you can quickly add positions using our predefined set of ideas and optimize them against your very unique investing style. A single investing idea is a collection of funds, stocks, ETFs, or cryptocurrencies that are programmatically selected from a pull of investment themes. After you determine your investment opportunity, you can then find an optimal portfolio that will maximize potential returns on the chosen idea or minimize its exposure to market volatility.

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Funds or Etfs that invest in both long and short positions of different entities to enhance returns from broad market movements over time. The Market Neutral Funds theme has 40 constituents at this time.
You can either use a buy-and-hold strategy to lock in the entire theme or actively trade it to take advantage of the short-term price volatility of individual constituents. Macroaxis can help you discover thousands of investment opportunities in different asset classes. In addition, you can partner with us for reliable portfolio optimization as you plan to utilize Market Neutral Funds Theme or any other thematic opportunities.
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When determining whether American Water Works is a good investment, qualitative aspects like company management, corporate governance, and ethical practices play a significant role. A comparison with peer companies also provides context and helps to understand if American Stock is undervalued or overvalued. This multi-faceted approach, blending both quantitative and qualitative analysis, forms a solid foundation for making an informed investment decision about American Water Works Stock. Highlighted below are key reports to facilitate an investment decision about American Water Works Stock:
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You can also try the Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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When running American Water's price analysis, check to measure American Water's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy American Water is operating at the current time. Most of American Water's value examination focuses on studying past and present price action to predict the probability of American Water's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move American Water's price. Additionally, you may evaluate how the addition of American Water to your portfolios can decrease your overall portfolio volatility.
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To fully project American Water's future profitability, investors should examine all historical financial statements. These statements provide investors with a comprehensive snapshot of the financial position of American Water Works at a specified time, usually calculated after every quarter, six months, or one year. Three primary documents fall into the category of financial statements. These documents include American Water's income statement, its balance sheet, and the statement of cash flows.
Potential American Water investors and stakeholders can use historical trends found within financial statements to determine how well the company is positioned for the future. Although American Water investors may work on each financial statement separately, they are all related. The changes in American Water's assets and liabilities, for example, are also reflected in the revenues and expenses that we see on American Water's income statement, which results in the company's gains or losses. Cash flows can provide more information regarding cash listed on a balance sheet but not equivalent to net income shown on the income statement. Please read more on our technical analysis and fundamental analysis pages.