Water and wastewater service provider Aqua America Inc. disclosed that it has successfully completed 19 acquisitions in 2016, which added nearly 25,000 customers to its existing base. In 2015, the company had added 17,747 customers primarily through utility system acquisitions.
A Sneak Peek into the Fourth Quarter
The recently concluded quarter marked the busiest period for Aqua America in terms of closing acquisitions of water and wastewater companies. The company was able to close nine acquisitions in the fourth quarter. Inorganic growth, along with the company’s organic initiatives, expanded its customer base by 1.6% on a year-over-year basis.
Consolidation in the Industry
Consolidation is the need of the hour in the fragmented U.S. water utility space. The old water utility infrastructure needs ample investments, which are easier for bigger players to make. Consolidation would therefore drive the necessary infrastructure overhauls that have become imperative for the industry at large.
During the six-year period ending Dec 31, 2016 Aqua America has expanded its utility operations by completing 94 acquisitions as well as other growth ventures.
Other water utilities like American Water Works (AWK - Free Report) and Connecticut Water Service are also actively expanding their customer base through acquisitions.
Water Infrastructure Needs to be Addressed
These companies have to continuously upgrade and maintain water infrastructure through massive investments. An Environment Protection Agency (EPA) 2016 report projects capital investment of $271 billion in upgrading drinking water and wastewater projects within the next five years.
The Dec 2016 increase in the interest rates might hurt companies operating in this space, as these utilities frequently need to take loans to execute capital projects. However, we believe that companies like American States Water Company (AWR - Free Report) that have an excellent rating will be able to get loans at favorable terms to carry out development work. Incidentally, company aimed to invest in the range of $105 million to $115 million in capital projects in 2016, following an investment of $95 million in the first nine months of 2016.
Regardless of the interest rate environment, water and wastewater operators have to take responsibility of infrastructural upgrades as and when required. This, in a way, creates ample scope for growth for regulated water utilities.
Price Movement
Over the last three months, Aqua America has outperformed the Zacks categorized Utility – Water Supply industry. During this period, the company’s shares gained 1.2%, compared with the industry’s increase of 0.2%.
Nine successfully completed acquisitions, along with the extensive network of water treatment, pumping and distribution facilities, and supply sources owned by the company helps it to serve its customers efficiently and reliably.
Zacks Rank
Aqua America currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Water and wastewater service provider Aqua America Inc. disclosed that it has successfully completed 19 acquisitions in 2016, which added nearly 25,000 customers to its existing base. In 2015, the company had added 17,747 customers primarily through utility system acquisitions.
A Sneak Peek into the Fourth Quarter
The recently concluded quarter marked the busiest period for Aqua America in terms of closing acquisitions of water and wastewater companies. The company was able to close nine acquisitions in the fourth quarter. Inorganic growth, along with the company’s organic initiatives, expanded its customer base by 1.6% on a year-over-year basis.
Consolidation in the Industry
Consolidation is the need of the hour in the fragmented U.S. water utility space. The old water utility infrastructure needs ample investments, which are easier for bigger players to make. Consolidation would therefore drive the necessary infrastructure overhauls that have become imperative for the industry at large.
During the six-year period ending Dec 31, 2016 Aqua America has expanded its utility operations by completing 94 acquisitions as well as other growth ventures.
Other water utilities like American Water Works (AWK - Free Report) and Connecticut Water Service are also actively expanding their customer base through acquisitions.
Water Infrastructure Needs to be Addressed
These companies have to continuously upgrade and maintain water infrastructure through massive investments. An Environment Protection Agency (EPA) 2016 report projects capital investment of $271 billion in upgrading drinking water and wastewater projects within the next five years.
The Dec 2016 increase in the interest rates might hurt companies operating in this space, as these utilities frequently need to take loans to execute capital projects. However, we believe that companies like American States Water Company (AWR - Free Report) that have an excellent rating will be able to get loans at favorable terms to carry out development work. Incidentally, company aimed to invest in the range of $105 million to $115 million in capital projects in 2016, following an investment of $95 million in the first nine months of 2016.
Regardless of the interest rate environment, water and wastewater operators have to take responsibility of infrastructural upgrades as and when required. This, in a way, creates ample scope for growth for regulated water utilities.
Price Movement
Over the last three months, Aqua America has outperformed the Zacks categorized Utility – Water Supply industry. During this period, the company’s shares gained 1.2%, compared with the industry’s increase of 0.2%.
Nine successfully completed acquisitions, along with the extensive network of water treatment, pumping and distribution facilities, and supply sources owned by the company helps it to serve its customers efficiently and reliably.
Zacks Rank
Aqua America currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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