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American Water (AWK) Indiana Unit Buys Lowell Water Systems
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American Water Works Company (AWK - Free Report) recently announced that its subsidiary, Indiana American Water, has acquired the Lowell water system. This acquisition will add 4,000 water customers to the company’s existing 1.32 million customer base.
This acquisition has further expanded Indiana American Water’s operations in Indiana. This acquisition is worth $24.5 million and is the largest acquisition made by Indiana American Water in the past two decades. Indiana American Water provides efficient water and wastewater services to more than one-third of the residents of Indiana through 35 water and wastewater systems.
Indiana American Water makes strategic acquisitions to expand operations in Indiana. In August 2021, the company completed the acquisition of River’s Edge water and wastewater systems in southeast Indiana, which added 100 water and 80 wastewater customers to the customer base.
Acquisitions & Investments Essential for Water Industry
The U.S. water utility industry is fragmented and upgrading the aging assets to provide high-quality quality services is the need of the hour. Per Environmental Protection Agency, at present, more than 51,000 community water systems and 16,000 community wastewater systems in the United States are providing water solutions to customers.
The aging of the water and wastewater pipelines is currently a big concern for the industry. 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. The pipeline breaks result in the wastage of 6 billion gallons of potable water each day and add to the loss of water utility operators.
Per Environment Protection Agency, U.S water and wastewater infrastructure need $473 billion and $271 billion, respectively, in the next 20 years to upgrade and maintain high-quality services. The American Jobs Plan has provisions for $111 billion in water and wastewater infrastructure upgrades. Government funding and investments from the water utilities operating in the United States are being used for upgrading the infrastructure.
Systematic Investment by Utilities
Big water utilities are making acquisitions to expand operations and are ensuring regular investments to upgrade the infrastructure. From the start of the year till Nov 1, American Water expanded the customer base by 7,450 through acquisitions. American Water has plans to invest $13-$14 billion in the 2022-2026 time period and $28-$32 billion in the 2022-2031 time frame.
In addition to American Water, other water utilities like Essential Utilities (WTRG - Free Report) and California Water Service Group (CWT - Free Report) have been making acquisitions and the necessary investments to upgrade infrastructure.
Essential Utilities completed two acquisitions, which added 7,430 new customers. At present, there are seven pending acquisition deals, which, when completed, will add 234,075 new customers to Essential Utilities’ existing customer base. WTRG has plans to invest $3 billion from 2021 through 2023 to fortify operations and efficiently serve the expanding customer base.
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. CWT reaffirmed 2021 capex estimates within $270-$300 million. Also, the midpoint of CWT’s capital expenditure planned for 2022, 2023, and 2024 is $355 million, $360 million, and $365 million, respectively.
Price Performance
Shares of American Water have outperformed the industry in the past six months.
Artesian Resources delivered an earnings surprise of 8% in the last reported quarter. The Zacks Consensus Estimate for fourth-quarter 2021 has moved up 3% in the past 60 days. The dividend yield of ARTNA is 2.33%.
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American Water (AWK) Indiana Unit Buys Lowell Water Systems
American Water Works Company (AWK - Free Report) recently announced that its subsidiary, Indiana American Water, has acquired the Lowell water system. This acquisition will add 4,000 water customers to the company’s existing 1.32 million customer base.
This acquisition has further expanded Indiana American Water’s operations in Indiana. This acquisition is worth $24.5 million and is the largest acquisition made by Indiana American Water in the past two decades. Indiana American Water provides efficient water and wastewater services to more than one-third of the residents of Indiana through 35 water and wastewater systems.
Indiana American Water makes strategic acquisitions to expand operations in Indiana. In August 2021, the company completed the acquisition of River’s Edge water and wastewater systems in southeast Indiana, which added 100 water and 80 wastewater customers to the customer base.
Acquisitions & Investments Essential for Water Industry
The U.S. water utility industry is fragmented and upgrading the aging assets to provide high-quality quality services is the need of the hour. Per Environmental Protection Agency, at present, more than 51,000 community water systems and 16,000 community wastewater systems in the United States are providing water solutions to customers.
The aging of the water and wastewater pipelines is currently a big concern for the industry. 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. The pipeline breaks result in the wastage of 6 billion gallons of potable water each day and add to the loss of water utility operators.
Per Environment Protection Agency, U.S water and wastewater infrastructure need $473 billion and $271 billion, respectively, in the next 20 years to upgrade and maintain high-quality services. The American Jobs Plan has provisions for $111 billion in water and wastewater infrastructure upgrades. Government funding and investments from the water utilities operating in the United States are being used for upgrading the infrastructure.
Systematic Investment by Utilities
Big water utilities are making acquisitions to expand operations and are ensuring regular investments to upgrade the infrastructure. From the start of the year till Nov 1, American Water expanded the customer base by 7,450 through acquisitions. American Water has plans to invest $13-$14 billion in the 2022-2026 time period and $28-$32 billion in the 2022-2031 time frame.
In addition to American Water, other water utilities like Essential Utilities (WTRG - Free Report) and California Water Service Group (CWT - Free Report) have been making acquisitions and the necessary investments to upgrade infrastructure.
Essential Utilities completed two acquisitions, which added 7,430 new customers. At present, there are seven pending acquisition deals, which, when completed, will add 234,075 new customers to Essential Utilities’ existing customer base. WTRG has plans to invest $3 billion from 2021 through 2023 to fortify operations and efficiently serve the expanding customer base.
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. CWT reaffirmed 2021 capex estimates within $270-$300 million. Also, the midpoint of CWT’s capital expenditure planned for 2022, 2023, and 2024 is $355 million, $360 million, and $365 million, respectively.
Price Performance
Shares of American Water have outperformed the industry in the past six months.
Zacks Rank & Key Pick
American Water Works currently has a Zacks Rank #3 (Hold). A better-ranked stock in the same industry is Artesian Resources (ARTNA - Free Report) , having a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Artesian Resources delivered an earnings surprise of 8% in the last reported quarter. The Zacks Consensus Estimate for fourth-quarter 2021 has moved up 3% in the past 60 days. The dividend yield of ARTNA is 2.33%.