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American Water Works Company, Inc. (AWK)

Company Dividend Discount ModelIndustry: Regulated WaterSector: Utilities

Valuation Snapshot

Stable Growth$134.44 - $358.89$205.97
Multi-Stage$95.22 - $103.86$99.46
Blended Fair Value$152.72
Current Price$139.19
Upside9.72%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS10.63%10.48%3.002.732.392.191.991.811.641.481.341.23
YoY Growth--9.96%13.92%9.11%10.03%10.20%10.66%10.38%10.73%9.21%10.65%
Dividend Yield--2.03%2.27%1.63%1.33%1.33%1.51%1.58%1.80%1.72%1.78%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)1,112.00
(-) Cash Dividends Paid (M)621.00
(=) Cash Retained (M)491.00
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)222.40139.0083.40
Cash Retained (M)491.00491.00491.00
(-) Cash Required (M)-222.40-139.00-83.40
(=) Excess Retained (M)268.60352.00407.60
(/) Shares Outstanding (M)195.00195.00195.00
(=) Excess Retained per Share1.381.812.09
LTM Dividend per Share3.183.183.18
(+) Excess Retained per Share1.381.812.09
(=) Adjusted Dividend4.564.995.27
WACC / Discount Rate9.08%9.08%9.08%
Growth Rate5.50%6.50%7.50%
Fair Value$134.44$205.97$358.89
Upside / Downside-3.41%47.98%157.84%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)1,112.001,184.281,261.261,343.241,430.551,523.541,569.24
Payout Ratio55.85%62.68%69.51%76.34%83.17%90.00%92.50%
Projected Dividends (M)621.00742.26876.671,025.401,189.781,371.181,451.55

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.08%9.08%9.08%
Growth Rate5.50%6.50%7.50%
Year 1 PV (M)674.09680.48686.86
Year 2 PV (M)723.02736.79750.69
Year 3 PV (M)768.01790.06812.52
Year 4 PV (M)809.27840.40872.41
Year 5 PV (M)847.00887.91930.39
PV of Terminal Value (M)14,747.4515,459.7516,199.32
Equity Value (M)18,568.8419,395.3920,252.20
Shares Outstanding (M)195.00195.00195.00
Fair Value$95.22$99.46$103.86
Upside / Downside-31.59%-28.54%-25.38%

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