American Water Works (AWK)
Profitability ratios
Return on sales
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Gross profit margin | 98.67% | 98.77% | 98.92% | 99.19% | 98.84% |
| Operating profit margin | 36.92% | 35.67% | 33.66% | 25.57% | 33.04% |
| Pretax margin | 29.21% | 28.36% | 26.65% | 35.07% | 24.46% |
| Net profit margin | 22.59% | 22.39% | 21.68% | 27.00% | 18.77% |
American Water Works has shown consistently high gross profit margins over the past five years, ranging from 98.67% to 99.19%. This indicates the company effectively manages its cost of goods sold relative to its revenue.
Operating profit margins have fluctuated, with a dip in 2021 at 25.57% but rebounding and steadily increasing to 36.92% in 2024. This demonstrates the company's ability to control its operating expenses and generate operating profits efficiently.
Pretax margins have also shown variability, with a significant increase in 2021 at 35.07% followed by fluctuations between 26.65% and 29.21% in the subsequent years. This suggests the company has experienced fluctuations in its non-operating income and expenses over the period.
Net profit margins have generally remained stable, ranging from 18.77% to 27.00%, showing consistent profitability after accounting for all expenses, including interest and taxes. This stability indicates American Water Works' ability to generate profits efficiently after all costs have been considered.
Return on investment
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 5.23% | 4.96% | 4.58% | 4.59% | 5.04% |
| Return on assets (ROA) | 3.20% | 3.12% | 2.95% | 4.84% | 2.86% |
| Return on total capital | 16.63% | 15.35% | 16.55% | 16.39% | 6.83% |
| Return on equity (ROE) | 10.17% | 9.64% | 10.66% | 17.31% | 10.99% |
American Water Works' profitability ratios show some fluctuations over the years.
- Operating return on assets (Operating ROA) has been relatively stable, ranging from 4.58% to 5.23% from 2022 to 2024. This ratio indicates that the company generates operating income efficiently relative to its asset base.
- Return on assets (ROA) experienced a significant increase in 2021, reaching 4.84%, but fluctuated around 3% in the following years. ROA measures the company's overall ability to generate profits from its assets.
- Return on total capital saw a notable increase from 2020 to 2021, reaching 16.39%, and remained relatively high in the subsequent years, fluctuating between 15.35% and 16.63%. This ratio reflects the returns generated from the total invested capital, including both equity and debt.
- Return on equity (ROE) reached its peak at 17.31% in 2021 but declined in the following years, ranging between 9.64% and 10.99%. ROE indicates the return generated on the shareholders' equity investment.
Overall, while American Water Works has shown fluctuations in its profitability ratios, the company has been able to maintain a reasonable level of profitability over the years.