American Water Works CoSTU:AWC +0.09%84 WACC % is 5.82% as of Jun. 29, 2026, which is 75% above its 10-year median of 3.32. GuruFocus rates STU:AWC with a GF Score™ of 84/100 and a GF Value™ of €136.14 (Modestly Undervalued). The stock has 3 warning signs investors should review. Among 514 Utilities - Regulated companies, American Water Works Co ranks better than 72.57% on this metric.
As of today (2026-06-29), American Water Works Co's weighted average cost of capital is 5.82%%. American Water Works Co's ROIC % is 4.17% (calculated using TTM income statement data).
American Water Works Co earns returns that do not match up to its cost of capital. It will destroy value as it grows.
For a comprehensive WACC calculation, please access the WACC Calculator.
American Water Works Co (STU:AWC) WACC % Explanation
Because it costs money to raise capital. A firm that generates higher ROIC % than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.
As of today, American Water Works Co's weighted average cost of capital is 5.82%%. American Water Works Co's ROIC % is 4.17% (calculated using TTM income statement data).
American Water Works Co earns returns that do not match up to its cost of capital. It will destroy value as it grows.
Be Aware
1. GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding latest one-year quarterly average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together.
For companies that report quarterly, GuruFocus combines all of the most recent year's quarterly debt data from the beginning of the year to the year-end and calculates the average.
For companies that report semi-annually, GuruFocus combines all of the most recent year's semi-annual debt data from the start of the year to the year-end and calculates the average.
For companies that report annually, GuruFocus combines the beginning and ending annual debt data from the most recent year and then calculates the average.
2. The WACC formula discussed above does not include Preferred Stock. Please adjust if preferred stock is considered.
3. (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.
4. GuruFocus uses the latest TTM Interest Expense divided by the latest one-year quarterly average debt to get the simplified cost of debt.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
For the Utilities - Regulated Water subindustry, American Water Works Co's WACC %, along with its competitors' market caps and WACC % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
American Water Works Co WACC % vs Utilities - Regulated Industry
For the Utilities - Regulated industry and Utilities sector, American Water Works Co's WACC % distribution charts can be found below:
* The bar in red indicates where American Water Works Co's WACC % falls into.
The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. The WACC is commonly referred to as the firm's cost of capital. Generally speaking, a company's assets are financed by debt and equity. WACC is the average of the costs of these sources of financing, each of which is weighted by its respective use in the given situation. By taking a weighted average, we can see how much interest the company has to pay for every dollar it finances.
WACC
=
E
/
(E + D)
*
Cost of Equity
+
D
/
(E + D)
*
Cost of Debt
*
(1 - Tax Rate)
1. Weights:
Generally speaking, a company's assets are financed by debt and equity. We need to calculate the weight of equity and the weight of debt.
The market value of equity (E) is also called "Market Cap". As of today, American Water Works Co's market capitalization (E) is €22805.538 Mil.
The market value of debt is typically difficult to calculate, therefore, GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding the latest one-year quarterly average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together. As of Mar. 2026, American Water Works Co's latest one-year quarterly average Book Value of Debt (D) is €13349.301 Mil.
a) weight of equity = E / (E + D) = 22805.538 / (22805.538 + 13349.301) = 0.6308
b) weight of debt = D / (E + D) = 13349.301 / (22805.538 + 13349.301) = 0.3692
2. Cost of Equity:
GuruFocus uses Capital Asset Pricing Model (CAPM) to calculate the required rate of return. The formula is:
Cost of Equity = Risk-Free Rate of Return + Beta of Asset * (Expected Return of the Market - Risk-Free Rate of Return)
a) GuruFocus uses 10-Year Treasury Constant Maturity Rate as the risk-free rate. It is updated daily. The current risk-free rate is 4.372%. Please go to Economic Indicators page for more information. Please note that we use the 10-Year Treasury Constant Maturity Rate of the country/region where the company is headquartered. If the data for that country/region is not available, then we will use the 10-Year Treasury Constant Maturity Rate of the United States as default.
b) Beta is the sensitivity of the expected excess asset returns to the expected excess market returns. American Water Works Co's beta is 0.4971.
c) (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.
Cost of Equity = 4.372% + 0.4971 * 6% = 7.3546%
3. Cost of Debt:
GuruFocus uses latest TTM Interest Expense divided by the latest one-year quarterly average debt to get the simplified cost of debt.
As of Mar. 2026, American Water Works Co's interest expense (positive number) was €544.876 Mil. Its total Book Value of Debt (D) is €13349.301 Mil.
Cost of Debt = 544.876 / 13349.301 = 4.0817%.
4. Multiply by one minus TTM Tax Rate:
GuruFocus uses the most recent TTM Tax Expense divided by the most recent TTM Pre-Tax Income to calculate the tax rate. The calculated TTM tax rate is limited to between 0% and 100%. If the calculated tax rate is higher than 100%, it is set to 100%. If the calculated tax rate is less than 0%, it is set to 0%.
The latest calculated TTM Tax Rate = 265.48 / 1211.743 = 21.91%.
American Water Works Co's Weighted Average Cost Of Capital (WACC) for Today is calculated as:
WACC
=
E / (E + D)
*
Cost of Equity
+
D / (E + D)
*
Cost of Debt
*
(1 - Tax Rate)
=
0.6308
*
7.3546%
+
0.3692
*
4.0817%
*
(1 - 21.91%)
=
5.82%
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
American Water Works Co (STU:AWC) has a WACC % of 5.82% as of Jun. 29, 2026. The weighted average cost of capital (WACC) is the average rate a company pays to finance assets. View historical data on American Water Works Co and its competitors. This is 75% above median its historical median of 3.32. Over the past decade, American Water Works Co's WACC % has ranged from 2.35 to 7.74. According to the industry distribution chart, American Water Works Co ranks #141 out of 514 companies in the Utilities - Regulated industry, placing it in the top 27.4%.
Is American Water Works Co's WACC % too high?
American Water Works Co's current WACC % of 5.82% is 75% above median its 10-year median of 3.32. Over the past 10 years, this metric has ranged from a low of 2.35 to a high of 7.74. The Utilities - Regulated industry median WACC % is 5.90. American Water Works Co's value of 5.82% is 1.3% below this industry median. Based on the distribution chart, American Water Works Co ranks #141 out of 514 companies in the Utilities - Regulated industry, which is above the industry midpoint. Overall, American Water Works Co has a GF Score™ of 84/100 and is considered Modestly Undervalued, reflecting its overall financial health beyond just this single metric.
How does American Water Works Co's WACC % compare to WTRG and AWR?
According to the Utilities - Regulated industry distribution chart, American Water Works Co ranks #141 out of 514 companies for WACC %. This puts American Water Works Co in the upper half of its industry. The industry median WACC % is 5.90. American Water Works Co's value of 5.82% is 1.3% below this benchmark. Historically, American Water Works Co's own WACC % has ranged from 2.35 to 7.74 over the past decade. While the company's 10-year median is 3.32 vs. the industry median of 5.90, American Water Works Co has consistently been below the industry average. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good WACC % for an Utilities - Regulated company?
The median WACC % among Utilities - Regulated companies is 5.90, based on 514 companies in the industry. Companies in the top quartile (top 25%) have a WACC % significantly above this median, while those in the bottom quartile fall well below. However, WACC % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. American Water Works Co's current WACC % of 5.82% is 1.3% below the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high WACC % mean?
A high WACC % can signal that a stock is expensive relative to its fundamentals. The weighted average cost of capital (WACC) is the average rate a company pays to finance assets. View historical data on American Water Works Co and its competitors. For the Utilities - Regulated industry, the median WACC % is 5.90 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. American Water Works Co's current WACC % is 5.82%, which is 75% above median its own 10-year median of 3.32. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is American Water Works Co stock overvalued right now?
Based on GuruFocus' analysis, American Water Works Co (STU:AWC) is currently considered Modestly Undervalued. The stock's GF Value™ is €136.14, compared to a current price of €116.25 — trading 14.6% below its estimated fair value. The current WACC % is 5.82%, which is 75% above median its 10-year median of 3.32 and 1.3% below the Utilities - Regulated industry median of 5.90. American Water Works Co's overall GF Score™ is 84/100 with 3 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is WACC % calculated?
WACC % is calculated from a company's financial statements. For American Water Works Co (STU:AWC), the current WACC % is 5.82% as of Jun. 29, 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is American Water Works Co (STU:AWC) Overvalued in 2026?
Based on GuruFocus' analysis, American Water Works Co stock appears to be undervalued.
The current stock price of €116.25 is trading 14.6% below its estimated GF Value™ of €136.14.
GuruFocus considers American Water Works Co to be Modestly Undervalued.
Key valuation signals for STU:AWC:
WACC %: 5.82% (75% above median its 10-year median of 3.32)
GF Value™: €136.14 vs. price of €116.25 (14.6% below fair value)
Industry Position: 1.3% below the Utilities - Regulated median (#141 of 514)
No single metric tells the full story. See the STU:AWC stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
American Water Works is the largest investor-owned US water and wastewater utility, serving nearly 4 million customers in 14 states. It provides water and wastewater services to residential, commercial, and industrial customers and operates predominantly in regulated markets. The company's nonregulated business is water services for military bases, which operates under long-term contracts with regulated-like returns. The proposed Essential Utilities acquisition would add regulated water and wastewater utilities in Ohio, North Carolina, and Texas while increasing its presence in Illinois, Indiana, Pennsylvania, New Jersey, and Virginia.
84GF Score
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