Assessing American Water Works (AWK) Valuation After a Modest 4% Monthly Share Price Rebound

American Water Works Company (AWK) has been quietly grinding higher recently, with shares up about 4% over the past month even as the past 3 months remain slightly underwater.

See our latest analysis for American Water Works Company.

Zooming out, that steady 30 day share price return of nearly 4% looks more like a gentle rebound within a choppy year. The year to date share price return is modest and the 3 year total shareholder return is still negative, suggesting sentiment is improving but not yet fully convinced.

If American Water Works has you rethinking your defensives, it could be worth scanning other regulated names and discovering healthcare stocks as potential complements in a resilient portfolio mix.

With earnings still growing and the share price only modestly ahead of analyst targets, is American Water Works quietly trading below its long term potential, or is the market already pricing in years of regulated growth?

Most Popular Narrative: 8.9% Undervalued

With American Water Works last closing at $130.97 against a popular fair value of $143.78, the prevailing storyline sees more upside than the market is currently pricing.

Heightened regulatory and societal focus on water quality and infrastructure modernization is accelerating rate case approvals and driving significant capital investment (e.g., $3.3 billion capital spend in 2025, requests for $111 million cumulative rate increases in CA by 2029); these factors enable predictable, above inflation rate increases and support sustainable earnings expansion.

Read the complete narrative.

Curious how steady, regulated earnings and rising margins can still justify a richer future earnings multiple than today, even in a slow growth utility? The most followed narrative quietly stacks long term revenue expansion, higher profitability, and a premium valuation into one cohesive forecast. Want to see exactly how those assumptions combine to support that higher fair value per share? Read on and unpack the full story behind the numbers.

Result: Fair Value of $143.78 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent cost inflation and heavier debt financing could squeeze margins and blunt returns, especially if regulators are less receptive to future rate hikes.

Find out about the key risks to this American Water Works Company narrative.

Another Angle on Valuation

On earnings, the picture is less forgiving. AWK trades on about 23 times earnings, richer than both its global water utility peers at 16.1 times and many direct comparables at 18.4 times. Even versus a 23.6 times fair ratio, the margin for error looks slim rather than generous.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own American Water Works Company Narrative

If this perspective does not quite fit your view, or you prefer to dig into the figures yourself, you can build a tailored narrative in just a few minutes, starting with Do it your way.

A great starting point for your American Water Works Company research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.