Value
4.8/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 5.3 |
| P/S | 6.9 |
| EV/EBITDA | 2.5 |
| Fwd P/E | 5.6 |
| PEG | 3.7 |
- ▸Forward P/E: 23.1x
- ▸PEG: 2.98
AWR · Why this verdict
Why American States Water (AWR) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictHOLD
Overall score5.7/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
American States Water is a California regulated water utility with strong 21% margins and a bullish breakout setup, but the price of $86.32 is 17.3% above the $71.40 analyst target and earnings arrive in 3 days. Concentration in California and its regulator, plus negative cash conversion, limit the case.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
As a regulated water utility, American States earns strong margins of 21% with operating and net margin components at the maximum 10/10 and a sector tailwind of +1.0. Quality breakdown | Margins should hold near 21% as rate cases keep pace with costs over 12 months. | →Stable |
| CounterROE scores only 4.6/10 and regulated returns are capped by rate-case outcomes, so margins may not translate into growth. | ||
The price of $86.32 is 17.3% above the $71.40 analyst target, with 6.1% downside to the stop, a negative reward-to-risk of -2.84. Estimated upside | Price should converge toward the analyst target, or analysts should raise targets above $80. | →Stable |
| CounterA breakout with a golden cross and rising volume suggests institutional buying that could keep the price above stale targets. | ||
Operations are concentrated in California and under a single regulator, the California Public Utilities Commission (CPUC), creating two high-severity concentration risks. Bear case | Rate decisions from the CPUC should remain constructive, supporting allowed returns over 12 months. | ↓Deteriorating |
| CounterThe CPUC has historically approved cost recovery for water utilities, and regulatory concentration is the source of the stable earnings stream. | ||
A breakout setup is in place with a golden cross, price above all moving averages, RSI at 64 and bullish MACD, with rising on-balance volume. Chart pattern detection | Price should hold above its 50-day average near $85.24 and the momentum score should stay above 6.0. | →Stable |
| CounterPrice is well above the analyst target and Bollinger and resistance components score near zero, suggesting an extended move vulnerable to a pullback. | ||
Earnings quality shows a red flag of -18% FCF/NI, and the company missed EPS in 2 of the last 4 quarters while earnings report arrives in 3 days. Quality breakdown | Free cash flow should move toward net income and EPS surprises should stay positive. | →Stable |
| CounterNegative free cash flow reflects utility capital spending that grows the rate base, and an average surprise of +4.2% shows beats outweigh misses. | ||
As a regulated water utility, American States earns strong margins of 21% with operating and net margin components at the maximum 10/10 and a sector tailwind of +1.0.
→StableQuality breakdown
- Expectation
- Margins should hold near 21% as rate cases keep pace with costs over 12 months.
CounterROE scores only 4.6/10 and regulated returns are capped by rate-case outcomes, so margins may not translate into growth.
The price of $86.32 is 17.3% above the $71.40 analyst target, with 6.1% downside to the stop, a negative reward-to-risk of -2.84.
→StableEstimated upside
- Expectation
- Price should converge toward the analyst target, or analysts should raise targets above $80.
CounterA breakout with a golden cross and rising volume suggests institutional buying that could keep the price above stale targets.
Operations are concentrated in California and under a single regulator, the California Public Utilities Commission (CPUC), creating two high-severity concentration risks.
↓DeterioratingBear case
- Expectation
- Rate decisions from the CPUC should remain constructive, supporting allowed returns over 12 months.
CounterThe CPUC has historically approved cost recovery for water utilities, and regulatory concentration is the source of the stable earnings stream.
A breakout setup is in place with a golden cross, price above all moving averages, RSI at 64 and bullish MACD, with rising on-balance volume.
→StableChart pattern detection
- Expectation
- Price should hold above its 50-day average near $85.24 and the momentum score should stay above 6.0.
CounterPrice is well above the analyst target and Bollinger and resistance components score near zero, suggesting an extended move vulnerable to a pullback.
Earnings quality shows a red flag of -18% FCF/NI, and the company missed EPS in 2 of the last 4 quarters while earnings report arrives in 3 days.
→StableQuality breakdown
- Expectation
- Free cash flow should move toward net income and EPS surprises should stay positive.
CounterNegative free cash flow reflects utility capital spending that grows the rate base, and an average surprise of +4.2% shows beats outweigh misses.
Per-dimension breakdown
Quality
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 4.6 |
| ROA | 3.5 |
| Gross margin | 7.5 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 3.9 |
| FCF quality | 0.0 |
| Moat | 6.9 |
| Piotroski F | 7.8 |
- ▸Strong margins: 21%
- ▸Earnings quality RED FLAG: -18% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
6.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.3 |
| EPS growth | 7.2 |
Momentum
7.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 4.7 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 5.2 |
| Analyst rating | 5.0 |
| Price target | 4.5 |
Insider
6.2/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 6.6 |
| notable moves | 7.0 |
- ▸Negligible insider selling — $128,456 (0.004% of mkt cap)
Peer rank
5.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.8 |
| quality rank | 6.1 |
| growth rank | 5.6 |
Technical
4.0/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.1 |
| support resistance | 1.9 |
| 52w position | 8.9 |
Risk (lower is worse)
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.3 |
| days to cover | 6.9 |
| volatility | 7.3 |
| put call | 4.0 |
| implied vol | 5.8 |
| beta | 9.8 |
| debt equity | 6.1 |
- ▸Concentration risks: 2 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 4.6 |
| dividend safety | 6.0 |
| news activity | 6.0 |
- ▸Earnings concerns: 2B/2M
- ▸Earnings in 1 day
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more.
Engine technical detail
verdict_path:
L4:PATH_F_HOLDPassed (5)
- MOMENTUM:7.7>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:-2.7=NEGATIVE
- EARNINGS_PROXIMITY:1d<=7d
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-2.66
Upside
-17.8%
Downside
6.7%
Sizing output
AVOID
SetupBreakout — Golden cross, above all MAs, RSI 66, MACD bullish
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $3.5B<$5B
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: MOMENTUM:7.7>=5.5. Top dim: Momentum at 7.7; weakest: Technical at 4.0. No conviction either direction.
The strongest dimensions are Momentum at 7.7, Risk (lower is worse) at 6.9, and Growth at 6.2; the weakest are Technical at 4.0, Value at 4.8, and Sentiment at 4.9. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of -2.66 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Strong Margins Regulated Utility
Trip ifNet margin falls below 15% from current level above 20%.
- P2Price Well Above Analyst Target
Trip ifPrice stays more than 10% above the analyst target from current 17.3% above.
- P3California Regulatory Concentration
Trip ifAllowed return rate decision from the CPUC drops more than 50 basis points below the current authorized level.
- P4Breakout Momentum Setup
Trip ifPrice falls below the 50-day average of $85.24 and RSI drops below 45 from current 64.
- P5Negative Cash Conversion Mixed Earnings
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.