Yahoo Finance American Water Works (AWK) Arm Acquires Assets Worth $21.8M
American Water Works AWK announced that its subsidiary, New Jersey American Water, completed the acquisition of water and wastewater systems of Egg Harbor City, NJ for $21.8 million. This acquisition will increase AWK’s customer base by 3,000.
A large portion of Egg Harbor City’s water and wastewater infrastructure is getting old, so repairs and upgrades are critical for maintaining proper potable water and sewer services. Per the agreement, New Jersey American Water will invest $14 million in the first 10 years to upgrade the city’s water and wastewater systems, including $9 million in the first five years, while keeping rates stable for customers.
Consolidation- A Must for the Water Space
Per the American Society of Civil Engineers ("ASCE"), more than 50,000 community water systems and 16,000 community wastewater systems in the United States are currently providing water solutions to customers.
Per the ASCE findings, due to the delay in essential pipeline repairs and maintenance, 6 billion gallons of treated water is lost every day in the United States. Due to many small operators in the industry and a lack of adequate funds, essential infrastructural upgrades and repairs get delayed at times.
The acquisition of small units by larger utilities ensures necessary investments in infrastructure upgrades and the continuation of high-quality customer service. American Water Works is the largest and most geographically diverse publicly traded water and wastewater utility company that continues to widen its market footprint through strategic acquisitions.
Essential Investments for Water Space
Per the U.S. Environmental Protection Agency (“EPA”), an estimated $744 billion investment is necessary to maintain and expand drinking water and wastewater services to meet demand over the next 20 years.
American Water Works is making regular investments to maintain its infrastructure. It aims to invest in the range of $14-$15 billion in the 2023-2027 period and $30-$34 billion for the 10 years of 2023-2032.
Other water utilities like Essential Utilities WTRG, California Water Service Group CWT and Middlesex Water MSEX have well-chalked-out capital investment plans to strengthen their infrastructure.
Essential Utilities plans to invest $1.1 billion in 2023 and $3.3 billion through 2025 to improve water and natural gas systems and better serve customers using improved information technology.
California Water Service plans to invest more than $725 million in capital expenditures through 2024.
Middlesex Water plans to invest $266 million during 2023-2025 to strengthen its water and wastewater infrastructure and provide services to customers in a safe, reliable and efficient manner.
Investments from the investor-owned utilities are not enough to meet the huge requirement, so the government is also assisting in upgrading aging water and wastewater infrastructure. The Bipartisan Infrastructure Law provided $50 billion to EPA to strengthen the drinking water and wastewater systems of the United States.
Price Performance
Over the past three months, American Water Works’ stock has gained 3.6% compared with the industry’s growth of 3.2%.
Image Source: Zacks Investment Research
Zacks Rank
American Water Works currently has a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
American Water Works Company, Inc. (AWK) : Free Stock Analysis Report
California Water Service Group (CWT) : Free Stock Analysis Report
Middlesex Water Company (MSEX) : Free Stock Analysis Report
Essential Utilities Inc. (WTRG) : Free Stock Analysis Report
