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American Water Works' (AWK) Arm to Buy Water & Sewer Systems
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American Water Works (AWK - Free Report) announced that its subsidiary Virginia American Water has signed an asset purchase agreement worth around $15 million for drinking water and wastewater assets of the Town of Cape Charles in Virginia. Currently, Virginia American Water serves about 320,000 people in Virginia.
The aging of crucial water and wastewater infrastructure is concerning for the United States water industry. Virginia American Water’s prime concern is to deliver clean, safe, reliable and affordable water and wastewater services. It is devoted to make the required capital investments, while keeping the rates stable. It has committed to invest more than $10 million over the next eight years in improving the system’s reliability and security of the acquired assets.
Water Industry Needs Consolidation
According to the Environmental Protection Agency, more than 50,000 community water systems and 16,000 community wastewater systems in the United States are providing water solutions to customers at present. Due to a large number of small operators in the industry and lack of adequate funds, essential upgrades and repairs of infrastructure get delayed at times.
The acquisition of small units by larger utilities ensures necessary investments for infrastructure upgrade and continuation of high-quality services to customers. American Water Works is the largest and most geographically diverse, publicly traded water and wastewater utility company, which continues to widen its market footprint through strategic acquisitions.
Utilities Continue to Consolidate
American Water Works is expanding its customer base through organic initiatives and acquisitions. It continues to focus on the acquisition of utilities that provide services to 5,000-50,000 customers. The company added 51,000 customers to its existing customer base through 15 closed acquisitions.
The Zacks Consensus Estimate for American Water Works' 2022 and 2023 earnings suggests year-over-year growth of 4.94% and 7.04%, respectively. The current dividend yield of the company is 1.7%.
Other water utilities like SJW Group (SJW - Free Report) , Consolidated Water Co. (CWCO - Free Report) , and Essential Utilities (WTRG - Free Report) in the water utility space are expanding operations through systematic acquisitions.
SJW Group completed more than 25 acquisitions in the 2010-2021 time frame and expanded its operations. In January 2022, it closed the acquisition of Texas Country Water in Comal, TX. The deal added more than 1,900 water and wastewater customers to its existing customer base. This was the fourth Texas acquisition by the SJW Group in the past 12 months. The company plans to invest $1.5 billion in the next five years to further strengthen its infrastructure.
The Zacks Consensus Estimate for SJW Group's 2022 and 2023 earnings implies year-over-year growth of 15.3% and 6%, respectively. The current dividend yield of the company is 1.8%.
Consolidated Water has recently exercised its right to acquire the remaining 39% of PERC Water Corporation's ("PERC") equity ownership for nearly $7.8 million. PERC’s strong operating performance, revenue growth and profitability, as well as its synergies with other areas of CWCO’s business and future growth prospects, are going to boost CWCO’s performance.
The Zacks Consensus Estimate for CWCO's 2022 and 2023 earnings implies year-over-year growth of 143.4% and 62.5%, respectively. The current dividend yield of the company is 2.3%.
In 2022, Essential Utilities acquired three water and wastewater systems, and added nearly $120 million in rate base and more than 23,000 new customers to its existing customer base. At present, WTRG has signed seven purchase agreements on closure, which will expand its customer base by nearly 218,000.
The Zacks Consensus Estimate for WTRG's 2022 and 2023 earnings implies year-over-year growth of 6.59% and 6.46%, respectively. The current dividend yield of the company is 2.4%.
Price Performance
Over the last three months, the American Water Works’ stock has returned 16.7%, outperforming the industry average of 13.2%.
Image: Bigstock
American Water Works' (AWK) Arm to Buy Water & Sewer Systems
American Water Works (AWK - Free Report) announced that its subsidiary Virginia American Water has signed an asset purchase agreement worth around $15 million for drinking water and wastewater assets of the Town of Cape Charles in Virginia. Currently, Virginia American Water serves about 320,000 people in Virginia.
The aging of crucial water and wastewater infrastructure is concerning for the United States water industry. Virginia American Water’s prime concern is to deliver clean, safe, reliable and affordable water and wastewater services. It is devoted to make the required capital investments, while keeping the rates stable. It has committed to invest more than $10 million over the next eight years in improving the system’s reliability and security of the acquired assets.
Water Industry Needs Consolidation
According to the Environmental Protection Agency, more than 50,000 community water systems and 16,000 community wastewater systems in the United States are providing water solutions to customers at present. Due to a large number of small operators in the industry and lack of adequate funds, essential upgrades and repairs of infrastructure get delayed at times.
The acquisition of small units by larger utilities ensures necessary investments for infrastructure upgrade and continuation of high-quality services to customers. American Water Works is the largest and most geographically diverse, publicly traded water and wastewater utility company, which continues to widen its market footprint through strategic acquisitions.
Utilities Continue to Consolidate
American Water Works is expanding its customer base through organic initiatives and acquisitions. It continues to focus on the acquisition of utilities that provide services to 5,000-50,000 customers. The company added 51,000 customers to its existing customer base through 15 closed acquisitions.
The Zacks Consensus Estimate for American Water Works' 2022 and 2023 earnings suggests year-over-year growth of 4.94% and 7.04%, respectively. The current dividend yield of the company is 1.7%.
Other water utilities like SJW Group (SJW - Free Report) , Consolidated Water Co. (CWCO - Free Report) , and Essential Utilities (WTRG - Free Report) in the water utility space are expanding operations through systematic acquisitions.
SJW Group completed more than 25 acquisitions in the 2010-2021 time frame and expanded its operations. In January 2022, it closed the acquisition of Texas Country Water in Comal, TX. The deal added more than 1,900 water and wastewater customers to its existing customer base. This was the fourth Texas acquisition by the SJW Group in the past 12 months. The company plans to invest $1.5 billion in the next five years to further strengthen its infrastructure.
The Zacks Consensus Estimate for SJW Group's 2022 and 2023 earnings implies year-over-year growth of 15.3% and 6%, respectively. The current dividend yield of the company is 1.8%.
Consolidated Water has recently exercised its right to acquire the remaining 39% of PERC Water Corporation's ("PERC") equity ownership for nearly $7.8 million. PERC’s strong operating performance, revenue growth and profitability, as well as its synergies with other areas of CWCO’s business and future growth prospects, are going to boost CWCO’s performance.
The Zacks Consensus Estimate for CWCO's 2022 and 2023 earnings implies year-over-year growth of 143.4% and 62.5%, respectively. The current dividend yield of the company is 2.3%.
In 2022, Essential Utilities acquired three water and wastewater systems, and added nearly $120 million in rate base and more than 23,000 new customers to its existing customer base. At present, WTRG has signed seven purchase agreements on closure, which will expand its customer base by nearly 218,000.
The Zacks Consensus Estimate for WTRG's 2022 and 2023 earnings implies year-over-year growth of 6.59% and 6.46%, respectively. The current dividend yield of the company is 2.4%.
Price Performance
Over the last three months, the American Water Works’ stock has returned 16.7%, outperforming the industry average of 13.2%.
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.