American States Water Company (AWR) Fundamental Analysis: Bull vs. Bear Case

AWR

American States Water Company

Fundamental data last updated:September 6, 2026

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company profile

SECTOR

Utilities

industry

Regulated Water

Exchange

NYSE

County of HQ

US

Next Earnings Date

Pending Announcement

Business Summary

American States Water Company, through its subsidiaries, provides water and electric services to residential, commercial, industrial, and other customers in the United States. It operates through three segments: Water, Electric, and Contracted Services. The company purchases, produces, distributes, and sells water, as well as distributes electricity. As of December 31, 2021, American States Water Company provided water service to 262,770 customers located throughout 10 counties in the State of California; and distributed electricity to 24,656 customers in San Bernardino County mountain communities in California. The company also provides water and/or wastewater services, including the operation, maintenance, and construction of facilities at the water and/or wastewater systems at various military installations. American States Water Company was incorporated in 1929 and is based in San Dimas, California.

VALUATION

P/E

22.37 Market Cap ($M USD)

$2.99B

Forward P/E

18.27 PEG

0.82 PRICE TO SALES

4.41 PRICE TO BOOK

2.81 EV / EBITDA

15.17 5-Year Average P/E

Free Cash Flow Yield

1.27%

DCF Value

$-30.60

Graham Number

$45.71

Price to FCF

78.78 EV to FCF

102.69 Earnings Yield

4.47%

FCF Yield

1.27%

DIVIDEND

Yield

2.64%

Annual Payout

$2.02

Payout Ratio

57.35%

Consecutive Years of Dividend Growth

5-Year Dividend Growth Rate

Financial Health & Profitability

Earnings Per Share

$3.41

Next Year EPS Growth Estimate

$4.18

Next Year Revenue Growth Estimate

$754.00M

Return on Equity (ROE)

13.06%

FREE CASH FLOW

Operating Margin

30.78%

Debt-to-Equity

0.90 Piotroski F-Score

6 Altman Z-Score

1.92 Return on Invested Capital (ROIC)

8.19%

Current Ratio

1.22 Quick Ratio

1.13 Net Debt to EBITDA

3.53 Interest Coverage

4.47 Gross Profit margin

57.52%

FCF PER SHARE

$0.97

REVENUE PER SHARE

$17.37

Gainseekers Quantitative Analysis

Summary

The market seems to be mispricing AWR, with its snapshot price trading significantly above its DCF value, suggesting overvaluation. The Forward P/E of 18.47 indicates moderate growth expectations, yet the Earnings Yield of 4.42% is not particularly compelling. The Altman Z-score of 1.93 raises red flags about financial distress risk, hinting at potential vulnerabilities. Despite these concerns, the Graham Number suggests a more conservative valuation, which the market appears to be ignoring. Overall, the financial health is mixed, with some caution warranted.

AI Exposure / Tech Reliance

Operating in the regulated water industry, AWR is somewhat insulated from rapid technological shifts, including AI. The nature of its business—providing essential utilities—means it faces less disruption from tech innovations compared to other sectors. However, any advancements in water management technology could still offer operational efficiencies.

The Bull Case

For the value or GARP investor, AWR presents a compelling case with its robust ROIC of 8.19%, indicating efficient capital use. The Piotroski F-Score of 6 suggests decent financial health, while the operating margin of 30.78% highlights strong pricing power. Despite a low FCF Yield of 1.26%, the company’s ability to maintain a solid dividend payout ratio of 57.35% underscores its commitment to returning value to shareholders.

The Bear Case

AWR faces significant structural risks, particularly with its high valuation multiples, such as a Price/Book of 2.84 and Price/Sales of 4.45, which suggest the stock is priced for perfection. The EV to FCF ratio of 103.53 is alarmingly high, indicating poor cash flow generation relative to its enterprise value. Additionally, with the stock trading close to its 52-week high, there is a risk of technical overextension. These factors, combined with a modest earnings surprise, paint a picture of a potentially overvalued stock.

Market Sentiment & Smart Money

Short Interest %

Analyst Consensus

Hold

Average Analyst Price Target

$89.50

Institutional Ownership %

1-Year Beta

0.59 Insider Buying % (6 Mo)

Distance to 52-Week High

6.36%

Distance to 52-Week Low

9.07%

EARNINGS SURPRISE %

-1.30%

50-DAY SMA

$76.43

200-DAY SMA

$74.33

⚠️ Financial Disclaimer:
This content is for informational purposes only and is not financial advice. Information may be delayed or inaccurate. We may earn a commission from partner links.