Growth Investor Scores American Water Works at 54%

American Water Works Company Inc receives a 54% rating from Growth Investor strategies. Despite passing several growth metrics, it notably fails in earnings persistence and long-term EPS growth.

Date: 17-02-2025

AI Rating: 5

Analysis of American Water Works Company Inc

According to the report, American Water Works Company Inc (AWK) has a mixed performance when evaluated against the criteria of the Growth Investor strategy. While it passed several important metrics, it also has critical areas where it fell short.

**Revenue Growth**: The report mentions that the stock fails in the revenue growth in relation to EPS growth, which indicates that while sales may be increasing, earnings are not keeping up proportionately. This can signal potential issues in maintaining profitability, affecting investor sentiment and possibly leading to downward pressure on stock prices.

**Earnings Per Share (EPS)**: The stock passes the EPS growth for the current quarter, indicating positive short-term performance. However, the failure in growth rate compared to prior quarters, and the failure in long-term EPS growth highlight concerns about the consistency and sustainability of earnings. These factors are detrimental as they reflect volatility, and could result in cautious behavior from investors.

**Profit Margins**: Although net income or profit margins are not directly mentioned, the combination of failing growth indicators suggests a potential risk of lowered margins, which would further affect investor confidence.

**Debt Management**: A favorable current ratio is noted through the total debt/equity ratio passing. This indicates good management of debt and suggests that the company is relatively stable in terms of financial leverage, which is a positive signal.

Overall, while American Water Works shows some strengths, such as passing the P/E ratio and some earnings tests, the failures in revenue growth relative to EPS growth and long-term earnings growth may create skepticism among investors. This could lead to mixed signals about the future performance of the stock, impacting its price stability.

Stocks: AWK