With A Return On Equity Of 9.6%, Has American Water Works Company, Inc.'s (NYSE:AWK) Management Done Well?
With A Return On Equity Of 9.6%, Has American Water Works Company, Inc.'s (NYSE:AWK) Management Done Well?
One of the best investments we can make is in our own knowledge and skill set. With that in mind, this article will work through how we can use Return On Equity (ROE) to better understand a business. By way of learning-by-doing, we'll look at ROE to gain a better understanding of American Water Works Company, Inc. (NYSE:AWK).
我們能做的最好的投資之一是我們自己的知識和技能。考慮到這一點，本文將探討如何使用股本回報率（ROE）來更好地了解業務。通過邊幹邊學的方式，我們將研究投資回報率，以更好地了解美國自來水公司（紐約證券交易所代碼：AWK）。
Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. Put another way, it reveals the company's success at turning shareholder investments into profits.
股本回報率或投資回報率是用於評估公司管理層利用公司資本效率的關鍵指標。換句話說，它揭示了公司成功地將股東投資轉化爲利潤。
How Do You Calculate Return On Equity?
你如何計算股本回報率？
The formula for ROE is:
ROE 的公式是：
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity
股本回報率 = 淨利潤（來自持續經營業務）÷ 股東權益
So, based on the above formula, the ROE for American Water Works Company is:
因此，根據上述公式，美國自來水公司的投資回報率爲：
9.6% = US$944m ÷ US$9.8b (Based on the trailing twelve months to December 2023).
9.6% = 9.44億美元 ÷ 98億美元（基於截至2023年12月的過去十二個月）。
The 'return' is the yearly profit. One way to conceptualize this is that for each $1 of shareholders' capital it has, the company made $0.10 in profit.
“回報” 是每年的利潤。將其概念化的一種方法是，公司每擁有1美元的股東資本，就會獲得0.10美元的利潤。
Does American Water Works Company Have A Good Return On Equity?
美國自來水公司的股本回報率是否良好？
Arguably the easiest way to assess company's ROE is to compare it with the average in its industry. The limitation of this approach is that some companies are quite different from others, even within the same industry classification. If you look at the image below, you can see American Water Works Company has a similar ROE to the average in the Water Utilities industry classification (8.4%).
可以說，評估公司投資回報率的最簡單方法是將其與行業平均水平進行比較。這種方法的侷限性在於，有些公司與其他公司有很大不同，即使在相同的行業分類中也是如此。如果你看下圖，你會發現美國自來水公司的投資回報率與自來水公用事業行業分類中的平均水平（8.4％）相似。
So while the ROE is not exceptional, at least its acceptable. While at least the ROE is not lower than the industry, its still worth checking what role the company's debt plays as high debt levels relative to equity may also make the ROE appear high. If so, this increases its exposure to financial risk. To know the 2 risks we have identified for American Water Works Company visit our risks dashboard for free.
因此，儘管投資回報率並不例外，但至少是可以接受的。儘管至少投資回報率不低於該行業，但仍值得檢查該公司的債務起了什麼作用，因爲相對於股權的高債務水平也可能使投資回報率顯得很高。如果是這樣，這會增加其金融風險敞口。要了解我們爲美國自來水公司確定的兩種風險，請免費訪問我們的風險儀表板。
How Does Debt Impact Return On Equity?
債務如何影響股本回報率？
Virtually all companies need money to invest in the business, to grow profits. That cash can come from retained earnings, issuing new shares (equity), or debt. In the first two cases, the ROE will capture this use of capital to grow. In the latter case, the debt used for growth will improve returns, but won't affect the total equity. In this manner the use of debt will boost ROE, even though the core economics of the business stay the same.
實際上，所有公司都需要資金來投資業務，以增加利潤。這些現金可以來自留存收益、發行新股（股權）或債務。在前兩種情況下，ROE將利用這種資本來增長。在後一種情況下，用於增長的債務將提高回報，但不會影響總權益。通過這種方式，債務的使用將提高投資回報率，儘管企業的核心經濟狀況保持不變。
Combining American Water Works Company's Debt And Its 9.6% Return On Equity
合併美國自來水公司的債務及其9.6％的股本回報率
American Water Works Company clearly uses a high amount of debt to boost returns, as it has a debt to equity ratio of 1.26. With a fairly low ROE, and significant use of debt, it's hard to get excited about this business at the moment. Debt does bring extra risk, so it's only really worthwhile when a company generates some decent returns from it.
美國自來水公司顯然使用大量債務來提高回報，因爲其負債權益比率爲1.26。由於投資回報率相當低，而且債務使用量很大，目前很難對這項業務感到興奮。債務確實會帶來額外的風險，因此只有當公司從中獲得可觀的回報時，債務才是真正值得的。
Conclusion
結論
Return on equity is one way we can compare its business quality of different companies. Companies that can achieve high returns on equity without too much debt are generally of good quality. If two companies have around the same level of debt to equity, and one has a higher ROE, I'd generally prefer the one with higher ROE.
股本回報率是我們可以比較不同公司的業務質量的一種方式。能夠在不負債過多的情況下獲得高股本回報的公司通常質量很好。如果兩家公司的債務與股權比率大致相同，而一家公司的投資回報率更高，那麼我通常更喜歡投資回報率更高的那家公司。
But when a business is high quality, the market often bids it up to a price that reflects this. The rate at which profits are likely to grow, relative to the expectations of profit growth reflected in the current price, must be considered, too. So I think it may be worth checking this free report on analyst forecasts for the company.
但是，當企業質量很高時，市場通常會以反映這一點的價格對其進行出價。相對於當前價格所反映的利潤增長預期，還必須考慮利潤可能的增長速度。因此，我認爲可能值得查看這份關於分析師對公司的預測的免費報告。
Of course American Water Works Company may not be the best stock to buy. So you may wish to see this free collection of other companies that have high ROE and low debt.
當然，美國自來水公司可能不是最值得購買的股票。因此，您不妨免費查看其他投資回報率高、負債率低的公司的名單。
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