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American Water (AWK) Arm to Buy Manville Wastewater Assets
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American Water Works Company, Inc.’s (AWK - Free Report) subsidiary, New Jersey American Water, announced that it entered an agreement to acquire the wastewater collection system of Borough of Manville, NJ, for $6.5 million. This acquisition will add 3,700 customers to New Jersey American Water’s portfolio.
Aging of water and wastewater infrastructure are big concerns for the water industry. Timely repairs and maintenance of aging water, and wastewater infrastructure are essential to providing high-quality 24x7 services to customers. As part of this acquisition deal, New Jersey American Water plans to invest more than $10 million to upgrade the aging sewer infrastructure of Borough of Manville in the next 10 years after the deal’s closure to provide high-quality sewer services to customers.
Aging Industry Needs Investments & Consolidation
Aging water and wastewater infrastructure, and delays in essential upgrades are concerns for the industry. Per American Society of Civil Engineers, nearly 50,000 community water systems and 16,000 wastewater treatment systems in the United States are presently providing water solutions to customers. Some of the service providers are too small and have limited financial strength to carry out essential and costly repairs on time, leading to pipeline breakage and disruption of services, and increasing the possibility of contamination.
Fragmentation in the water and wastewater industry is a headwind. Large water utility companies continue to acquire small players to ensure the extension of high-quality services to customers and the investments required to upgrade old and acquired assets. Per U.S. Environmental Protection Agency, an investment of nearly $744 billion is necessary to maintain, and expand water and wastewater services to meet demand over the next 20 years.
American Water, through its subsidiaries, is making systematic acquisitions and taking essential steps to upgrade the old infrastructure of its acquired assets. In 2023, the company added 18,100 customers through 23 acquisitions in eight states. AWK’s pending 25 acquisitions (as of Dec 31, 2023), when completed, will add another 88,300 customers to its customer base. Buyouts allow the company to get fresh demand for its services and expand its revenue stream.
In 2024, AWK aims to invest $3.1 billion, with a significant portion utilized for infrastructure improvements in regulated businesses. Over the long term, management aims to invest in the range of $16-$17 billion in the 2024-2028 period and $34-$38 billion in the 2024-2033 period.
California Water Service Group (CWT - Free Report) is also expanding operations through inorganic routes. It is expected to invest $365 million in 2024 to upgrade its infrastructure and efficiently serve its expanding customer base. The company is also acquiring water and wastewater systems to expand its operations.
In January 2024, CWT’s subsidiaries, Hawaii Water Service and New Mexico Water Service, have acquired the assets of HOH Utilities, LLC and Monterey Water Company, respectively. This twin acquisition added nearly 2,200 new customers.
Essential Utilities (WTRG - Free Report) is also making acquisitions to expand its operations. Since 2015, it has expanded its utility operations by completing several water and wastewater acquisitions, adding 129,000 customers. The seven acquisitions completed in 2023 added 11,000 customers.
WTRG has six signed purchase agreements for additional wastewater systems in Pennsylvania and Illinois that are pending and are expected to add over 215,000 retail customers or equivalent dwelling units.
Essential Utilities plans to invest $7.2 billion in the 2024-2028 period to strengthen its water and natural gas operations further.
Price Performance
Over the last month, AWK shares have lost 3%, wider than the industry’s 1.1% decline.
.
Image Source: Zacks Investment Research
Zacks Ranks & Another Stock to Consider
American Water currently has a Zacks Rank #2 (Buy).
CWCO’s long-term (three-to-five years) earnings growth rate is pegged at 8%. The Zacks Consensus Estimate for 2024 earnings of $1.24 per share suggests an increase of 0.8% over the past 60 days.
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American Water (AWK) Arm to Buy Manville Wastewater Assets
American Water Works Company, Inc.’s (AWK - Free Report) subsidiary, New Jersey American Water, announced that it entered an agreement to acquire the wastewater collection system of Borough of Manville, NJ, for $6.5 million. This acquisition will add 3,700 customers to New Jersey American Water’s portfolio.
Aging of water and wastewater infrastructure are big concerns for the water industry. Timely repairs and maintenance of aging water, and wastewater infrastructure are essential to providing high-quality 24x7 services to customers. As part of this acquisition deal, New Jersey American Water plans to invest more than $10 million to upgrade the aging sewer infrastructure of Borough of Manville in the next 10 years after the deal’s closure to provide high-quality sewer services to customers.
Aging Industry Needs Investments & Consolidation
Aging water and wastewater infrastructure, and delays in essential upgrades are concerns for the industry. Per American Society of Civil Engineers, nearly 50,000 community water systems and 16,000 wastewater treatment systems in the United States are presently providing water solutions to customers. Some of the service providers are too small and have limited financial strength to carry out essential and costly repairs on time, leading to pipeline breakage and disruption of services, and increasing the possibility of contamination.
Fragmentation in the water and wastewater industry is a headwind. Large water utility companies continue to acquire small players to ensure the extension of high-quality services to customers and the investments required to upgrade old and acquired assets. Per U.S. Environmental Protection Agency, an investment of nearly $744 billion is necessary to maintain, and expand water and wastewater services to meet demand over the next 20 years.
American Water, through its subsidiaries, is making systematic acquisitions and taking essential steps to upgrade the old infrastructure of its acquired assets. In 2023, the company added 18,100 customers through 23 acquisitions in eight states. AWK’s pending 25 acquisitions (as of Dec 31, 2023), when completed, will add another 88,300 customers to its customer base. Buyouts allow the company to get fresh demand for its services and expand its revenue stream.
In 2024, AWK aims to invest $3.1 billion, with a significant portion utilized for infrastructure improvements in regulated businesses. Over the long term, management aims to invest in the range of $16-$17 billion in the 2024-2028 period and $34-$38 billion in the 2024-2033 period.
California Water Service Group (CWT - Free Report) is also expanding operations through inorganic routes. It is expected to invest $365 million in 2024 to upgrade its infrastructure and efficiently serve its expanding customer base. The company is also acquiring water and wastewater systems to expand its operations.
In January 2024, CWT’s subsidiaries, Hawaii Water Service and New Mexico Water Service, have acquired the assets of HOH Utilities, LLC and Monterey Water Company, respectively. This twin acquisition added nearly 2,200 new customers.
Essential Utilities (WTRG - Free Report) is also making acquisitions to expand its operations. Since 2015, it has expanded its utility operations by completing several water and wastewater acquisitions, adding 129,000 customers. The seven acquisitions completed in 2023 added 11,000 customers.
WTRG has six signed purchase agreements for additional wastewater systems in Pennsylvania and Illinois that are pending and are expected to add over 215,000 retail customers or equivalent dwelling units.
Essential Utilities plans to invest $7.2 billion in the 2024-2028 period to strengthen its water and natural gas operations further.
Price Performance
Over the last month, AWK shares have lost 3%, wider than the industry’s 1.1% decline.
.
Image Source: Zacks Investment Research
Zacks Ranks & Another Stock to Consider
American Water currently has a Zacks Rank #2 (Buy).
Another top-ranked stock from the same industry is Consolidated Water (CWCO - Free Report) . The company presently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CWCO’s long-term (three-to-five years) earnings growth rate is pegged at 8%. The Zacks Consensus Estimate for 2024 earnings of $1.24 per share suggests an increase of 0.8% over the past 60 days.