American States Water Co (NYSE: AWR)

Sector: Utilities Industry: Utilities - Regulated Water CIK: 0001056903
Market Cap 2.79 Bn
P/B 5.97
P/E 47.69
P/S 6.18
ROIC (Qtr) 7.78
Div Yield % 1.85
Rev 1y % (Qtr) 12.94
Total Debt (Qtr) 921.78 Mn
Debt/Equity (Qtr) 0.91
Add ratio to table...

About

American States Water Company (AWR) is a significant player in the water and electric utility industry in the United States, specifically in California. Established in 1928, the company has grown to become a key provider of essential services in the region. AWR's operations are divided into three segments: water, electric, and contracted services. The water segment is a crucial part of AWR's operations, responsible for the procurement, production, distribution, and sale of water in 10 counties in California. This segment is regulated by the California...

Read more

Investment thesis

Bull case

  • Healthy cash reserves of 26.07M provide 3.45x coverage of short-term debt 7.56M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 266.53M provides strong 73.18x coverage of stock compensation 3.64M, indicating sustainable incentive practices.
  • Strong tangible asset base of 2.66B provides 2.88x coverage of total debt 921.78M, indicating robust asset backing and low credit risk.
  • Strong operating cash flow of 266.53M provides 2.53x coverage of SG&A expenses 105.42M, showing efficient operational cost management.
  • Tangible assets of 2.66B provide exceptional 254.82x coverage of deferred revenue 10.42M, showing strong service capability backing.

Bear case

  • Operating cash flow of 266.53M barely covers its investment activities of (232.62M), with a coverage ratio of -1.15, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 266.53M provides thin coverage of dividend payments of (72.73M) with a -3.66 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • High receivables of 153.44M relative to inventory of 16.95M (9.05 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Free cash flow of 34.92M provides weak coverage of capital expenditures of 231.61M, with a 0.15 ratio suggesting additional external financing needs for growth initiatives.
  • Free cash flow of 34.92M represents just -1.44x of debt issuance (24.25M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Segments Breakdown of Revenue (2024)

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Utilities - Regulated Water
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 AWK American Water Works Company, Inc. 24.13 Bn 37.82 6.54 15.37 Bn
2 WTRG Essential Utilities, Inc. 6.86 Bn 45.52 9.97 7.98 Bn
3 AWR American States Water Co 2.79 Bn 47.69 6.18 0.92 Bn
4 CWT California Water Service Group 2.22 Bn 43.86 3.64 1.52 Bn
5 HTO H2O America 1.79 Bn 19.00 2.39 1.90 Bn
6 MSEX Middlesex Water Co 0.99 Bn 22.76 5.03 0.41 Bn
7 CWCO Consolidated Water Co. Ltd. 0.54 Bn 88.40 10.18 0.00 Bn
8 YORW York Water Co 0.47 Bn 23.81 7.76 0.23 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.18 1.15
EV to Cash from Ops. EV/CFO 37.24 23.08
EV to Debt EV to Debt 3.41 18.00
EV to EBIT EV/EBIT 27.15 23.85
EV to EBITDA EV/EBITDA 20.03 16.61
EV to Free Cash Flow [EV/FCF] EV/FCF -208.72 -20.94
EV to Market Cap EV to Market Cap 1.13 1.32
EV to Revenue EV/Rev 6.96 9.58
Price to Book Value [P/B] P/B 5.97 4.93
Price to Earnings [P/E] P/E 47.69 38.23
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.79 0.89
Dividend Payout Ratio % Div Payout % (Qtr) 56.40 56.90
Dividend per Basic Share Div per Share (Qtr) 1.90 1.13
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 210.06 -14.77
Interest Coverage Int. cover (Qtr) 4.49 279.41
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -2.53 -66.90
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 58.32 15.05
Dividend Growth (1y) % Div 1y % (Qtr) 8.32 6.56
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 12.30 -2.63
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 8.84 0.44
EBIT Growth (1y) % EBIT 1y % (Qtr) 7.07 -4.60
EBT Growth (1y) % EBT 1y % (Qtr) 11.52 -5.63
EPS Growth (1y) % EPS 1y % (Qtr) 13.47 -4.34
FCF Growth (1y) % FCF 1y % (Qtr) 143.38 -313.21
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 7.52 349.72
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.24 0.18
Cash Payout Ratio Cash Payout (Qtr) 0.15 0.04
Cash Ratio Cash Ratio (Qtr) 0.13 0.68
Current Ratio Curr Ratio (Qtr) 1.27 1.38
Debt to Equity Ratio Debt/Equity (Qtr) 0.91 1.08
Interest Cover Ratio Int Coverage (Qtr) 4.49 279.41
Times Interest Earned Times Interest Earned (Qtr) 4.49 279.41
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 40.60 31.76
EBIT Margin % EBIT Margin % (Qtr) 33.16 17.86
EBT Margin % EBT Margin % (Qtr) 25.77 6.26
Gross Margin % Gross Margin % (Qtr) 63.10 53.31
Net Profit Margin % Net Margin % (Qtr) 20.40 2.23