American Water Works (AWK)
Profitability ratios
Return on sales
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Gross profit margin | 98.77% | 98.92% | 99.19% | 98.84% | 98.84% |
| Operating profit margin | 35.67% | 33.66% | 25.57% | 33.04% | 33.67% |
| Pretax margin | 28.36% | 26.65% | 35.07% | 24.46% | 23.10% |
| Net profit margin | 22.39% | 21.68% | 27.00% | 18.77% | 17.22% |
American Water Works Co. Inc. has shown consistent gross profit margins of 100% across the years 2019 to 2023, indicating that the company effectively controls its production and operating costs. The operating profit margin has gradually improved from 30.43% in 2021 to 35.50% in 2023, showcasing the company's ability to efficiently manage its operating expenses.
The pretax margin saw fluctuations over the years, with a significant decrease in 2021 followed by an increase in 2023. This indicates that the company's earnings before taxes have not been stable, but the recent improvement is a positive sign.
The net profit margin has also shown an upward trend from 17.20% in 2019 to 22.30% in 2023, indicating that American Water Works Co. Inc. is becoming more profitable after deducting all expenses, including taxes. Overall, the company's profitability ratios demonstrate a positive trend, with improvements in operating efficiency and net profitability over the years.
Return on investment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 4.96% | 4.58% | 4.59% | 5.04% | 5.35% |
| Return on assets (ROA) | 3.12% | 2.95% | 4.84% | 2.86% | 2.74% |
| Return on total capital | 15.35% | 16.55% | 16.39% | 6.83% | 7.64% |
| Return on equity (ROE) | 9.64% | 10.66% | 17.31% | 10.99% | 10.15% |
American Water Works Co. Inc.'s profitability ratios show mixed performance over the past five years. The Operating return on assets (Operating ROA) has fluctuated slightly between 4.58% and 5.31%, indicating that the company is generating profits from its operations relative to its total assets, with a slight decline in 2023 compared to the previous year.
Return on assets (ROA) also exhibits variability, ranging from 2.74% to 4.84%. This ratio reflects the company's ability to generate profits from all its assets. In 2021, there was a significant increase in ROA, indicating improved profitability, before declining in the subsequent years.
Return on total capital has shown a similar trend, ranging from 6.34% to 7.73%. This ratio measures the efficiency of the company in generating returns from both debt and equity investments. The slight decline in 2023 compared to the previous year suggests some challenges in optimizing the returns on total capital.
Return on equity (ROE) has varied between 9.64% and 17.31% over the past five years. ROE reflects the profitability generated for shareholders' equity, and the substantial decrease in 2021 could be a result of various factors impacting the company's financial performance.
In conclusion, while American Water Works Co. Inc. has shown profitability over the years, there are fluctuations in its profitability ratios that may indicate changing dynamics within the company or its industry. Further analysis of the company's financial statements and industry trends would be necessary to fully understand the factors driving these fluctuations.