Is American Water Works Co., Inc. overvalued or undervalued?

As of 30 October 2024, the valuation grade for American Water Works Co., Inc. has moved from very expensive to expensive, indicating a slight improvement in perceived value but still suggesting a high valuation. The company appears to be overvalued based on its current metrics, with a P/E ratio of 26, a Price to Book Value of 2.66, and an EV to EBITDA ratio of 16.39. These ratios are significantly higher than the industry averages, reinforcing the notion of overvaluation.
In comparison to peers, American Water Works has a P/E ratio of 26.35, which is notably higher than the industry average, and its PEG ratio stands at 2.26, suggesting that growth expectations may not justify the current price. Other peers in the industry show more favorable valuations, indicating that American Water Works is not competitively priced. Additionally, while the company has performed well in the short term with a YTD return of 15.66%, this is overshadowed by its long-term underperformance relative to the S&P 500, which raises concerns about its sustainability at current valuation levels.