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SJW Group's (SJW) Unit SJWTX Buys Water & Wastewater Assets
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SJW Group (SJW - Free Report) announced that its unit SJWTX Inc. has completed the acquisition of the Kendall West and Bandera East utilities, which added more than 1,600 water and wastewater service connections to its existing portfolio.
SJWTX has been successfully expanding its operation in Texas through acquisitions and has completed 14 acquisitions since 2006. SJWTX has added 17,400 water and wastewater connections to its portfolio in the past 15 years. SJWTX has been investing steadily to increase the reliability of services and efficiently serve the expanding customer base. In 2022, SJWTX plans to invest $24.5 million to further strengthen the water distribution system in Texas and reduce water loss due to leaks and breakage in pipelines.
Consolidation Necessary for Water Industry
Per Environmental Protection Agency, at present, more than 53,000 community water systems and 16,000 community wastewater systems in the United States are providing water solutions to customers. This highly fragmented industry creates operational challenges in meeting the requirement for replacement and upgrading the aging water and wastewater infrastructure. This is resulting in frequent breaks in pipelines.
Per the findings of the American Society of Civil Engineers, water main breaks occur every two minutes in the United States due to the aging of the existing water infrastructure. Pipeline breaks result in the wastage of 6 billion gallons of potable water each day and add to the loss of water utility operators.
Consolidation of small water utilities will continue to play a vital role in the water space. Acquisitions enable bigger water companies to ensure the extension of high-quality services to customers and the investments required to upgrade old acquired assets.
Given the aging of the water and wastewater infrastructure of the water industry, acquisitions by large utilities followed by systematic investments will ensure better services.
American Water Works (AWK - Free Report) continues to actively expand the business through the inorganic route. From the start of the year till Nov 1, 2021, American Water expanded the customer base by 7,450 through acquisitions. Its pending acquisitions (as of Nov 1), when completed, will add another 82,700 customers to the customer base.
Other water utilities like The York Water Company (YORW - Free Report) and California Water Service Group (CWT - Free Report) , among others, have been making acquisitions to expand operations. California Water Service Group entered into an agreement to acquire four assets and the deal will close after the necessary approvals. These pending acquisitions, when completed, will add up to 3,400 water connections and 4,700 wastewater connections to California Water Service Group’s customer base. The current dividend yield of CWT is 1.32%.
York Water completed three acquisitions in 2020 and expanded its certificated territory to three more municipalities. York Water further expanded operations in the United States in 2021 with the closing of major acquisitions. The current dividend yield of YORW is 1.55%.
The Zacks Consensus Estimate for 2021 earnings for American Water, California Water Service Group, and York Water has moved up 8.9%, 0.5%, and 1.6%, year over year, respectively.
Price Performance
Shares of SJW Group have outperformed the industry in the past three months.
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SJW Group's (SJW) Unit SJWTX Buys Water & Wastewater Assets
SJW Group (SJW - Free Report) announced that its unit SJWTX Inc. has completed the acquisition of the Kendall West and Bandera East utilities, which added more than 1,600 water and wastewater service connections to its existing portfolio.
SJWTX has been successfully expanding its operation in Texas through acquisitions and has completed 14 acquisitions since 2006. SJWTX has added 17,400 water and wastewater connections to its portfolio in the past 15 years. SJWTX has been investing steadily to increase the reliability of services and efficiently serve the expanding customer base. In 2022, SJWTX plans to invest $24.5 million to further strengthen the water distribution system in Texas and reduce water loss due to leaks and breakage in pipelines.
Consolidation Necessary for Water Industry
Per Environmental Protection Agency, at present, more than 53,000 community water systems and 16,000 community wastewater systems in the United States are providing water solutions to customers. This highly fragmented industry creates operational challenges in meeting the requirement for replacement and upgrading the aging water and wastewater infrastructure. This is resulting in frequent breaks in pipelines.
Per the findings of the American Society of Civil Engineers, water main breaks occur every two minutes in the United States due to the aging of the existing water infrastructure. Pipeline breaks result in the wastage of 6 billion gallons of potable water each day and add to the loss of water utility operators.
Consolidation of small water utilities will continue to play a vital role in the water space. Acquisitions enable bigger water companies to ensure the extension of high-quality services to customers and the investments required to upgrade old acquired assets.
Given the aging of the water and wastewater infrastructure of the water industry, acquisitions by large utilities followed by systematic investments will ensure better services.
American Water Works (AWK - Free Report) continues to actively expand the business through the inorganic route. From the start of the year till Nov 1, 2021, American Water expanded the customer base by 7,450 through acquisitions. Its pending acquisitions (as of Nov 1), when completed, will add another 82,700 customers to the customer base.
Other water utilities like The York Water Company (YORW - Free Report) and California Water Service Group (CWT - Free Report) , among others, have been making acquisitions to expand operations. California Water Service Group entered into an agreement to acquire four assets and the deal will close after the necessary approvals. These pending acquisitions, when completed, will add up to 3,400 water connections and 4,700 wastewater connections to California Water Service Group’s customer base. The current dividend yield of CWT is 1.32%.
York Water completed three acquisitions in 2020 and expanded its certificated territory to three more municipalities. York Water further expanded operations in the United States in 2021 with the closing of major acquisitions. The current dividend yield of YORW is 1.55%.
The Zacks Consensus Estimate for 2021 earnings for American Water, California Water Service Group, and York Water has moved up 8.9%, 0.5%, and 1.6%, year over year, respectively.
Price Performance
Shares of SJW Group have outperformed the industry in the past three months.
Zacks Rank
SJW Group currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.