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California Water's (CWT) Arm Gets Nod to Acquire Stroh's Water
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California Water Service Group’s (CWT - Free Report) unit, Washington Water Service, has received regulatory approval from the Washington Utilities and Transportation Commission to acquire the water assets of Stroh’s Water Company. The acquisition is subject to customary conditions and is expected to close by the first quarter of 2023.
The acquisition of Stroh’s water system will add 900 customers to Washington Water Service’s customer base. Washington Water Service aims at improving the reliability of Stroh’s Water services by interconnecting Stroh’s system with its Gig Harbor systems.
Since March 2021, Washington Water Service has been serving Stroh’s Water customers through an operation and maintenance agreement, and this latest acquisition will enable it to serve customers directly.
Strengthening Operations via Acquisitions & Investments
California Water Service’s customer base increased year over year by 0.8% in 2021. CWT is making steady efforts to grow either organically or inorganically, and the customer base is likely to continue witnessing this uptrend in 2022.
In July, California Water Service’s another unit, Hawaii Water Service, received the commission approval to acquire the assets of HOH Utilities, LLC. This acquisition will further expand CWT’s operation in Kauai County and will add 1,800 customers to its existing customer base in California.
The company makes strategic acquisitions to expand its operations in the United States. In 2021, CWT’s units completed four acquisitions, which added 585 water connections and 3,000 wastewater connections.
The aging of water and wastewater pipelines is currently a big concern for the industry and requires consistent investments to maintain and upgrade infrastructure. California Water Service invested $293.2 million in 2021 and $144.6 million in the first six months of 2022. CWT expects to invest $1,080 million in the 2022-2024 period for upgrading infrastructure.
Per the 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 highly fragmented water industry creates operational challenges as a large portion of water and wastewater infrastructure is nearing the end of an effective service life.
The acquisition of small units by larger utilities ensures necessary investments for upgrading infrastructure and continuing high-quality services for customers. Some companies in the water industry that are expanding operations through acquisitions are American Water Works (AWK - Free Report) , Essential Utilities (WTRG - Free Report) and SJW Group (SJW - Free Report) .
American Water Works continues to widen its market footprint through strategic acquisitions. In September 2022, AWK’s subsidiary, Illinois American Water, acquired the water and wastewater system assets of the City of Villa Grove, IL, for $11 million. The acquisition will add 1,489 water and 1,069 wastewater customers to the company’s existing base of 1.3 million.
During the six years ended Dec 31, 2021, Essential Utilities expanded utility operations by completing many water and wastewater acquisitions, which added 94,000 new customers. In the first quarter of 2022, the company completed one acquisition, which added 11,000 customers.
In January 2022, SJW Group closed the acquisition of Texas Country Water in Comal, TX. The acquisition added more than 1,900 water and wastewater customers to the existing customer base. This is the fourth Texas acquisition by SJW Group in the past 12 months.
The Zacks Consensus Estimate for AWK, WTRG and SJW’s 2022 earnings implies year-over-year growth of 4.5%, 6.6% and 15.3%, respectively.
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California Water's (CWT) Arm Gets Nod to Acquire Stroh's Water
California Water Service Group’s (CWT - Free Report) unit, Washington Water Service, has received regulatory approval from the Washington Utilities and Transportation Commission to acquire the water assets of Stroh’s Water Company. The acquisition is subject to customary conditions and is expected to close by the first quarter of 2023.
The acquisition of Stroh’s water system will add 900 customers to Washington Water Service’s customer base. Washington Water Service aims at improving the reliability of Stroh’s Water services by interconnecting Stroh’s system with its Gig Harbor systems.
Since March 2021, Washington Water Service has been serving Stroh’s Water customers through an operation and maintenance agreement, and this latest acquisition will enable it to serve customers directly.
Strengthening Operations via Acquisitions & Investments
California Water Service’s customer base increased year over year by 0.8% in 2021. CWT is making steady efforts to grow either organically or inorganically, and the customer base is likely to continue witnessing this uptrend in 2022.
In July, California Water Service’s another unit, Hawaii Water Service, received the commission approval to acquire the assets of HOH Utilities, LLC. This acquisition will further expand CWT’s operation in Kauai County and will add 1,800 customers to its existing customer base in California.
The company makes strategic acquisitions to expand its operations in the United States. In 2021, CWT’s units completed four acquisitions, which added 585 water connections and 3,000 wastewater connections.
The aging of water and wastewater pipelines is currently a big concern for the industry and requires consistent investments to maintain and upgrade infrastructure. California Water Service invested $293.2 million in 2021 and $144.6 million in the first six months of 2022. CWT expects to invest $1,080 million in the 2022-2024 period for upgrading infrastructure.
Zacks Rank & Price Performance
California Water Service presently has a Zacks Rank #2 (Buy). In the past three months, shares of CWT have declined 3.2%, narrower than the industry’s decline of 6.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Image Source: Zacks Investment Research
Consolidation Essential for the Water Industry
Per the 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 highly fragmented water industry creates operational challenges as a large portion of water and wastewater infrastructure is nearing the end of an effective service life.
The acquisition of small units by larger utilities ensures necessary investments for upgrading infrastructure and continuing high-quality services for customers. Some companies in the water industry that are expanding operations through acquisitions are American Water Works (AWK - Free Report) , Essential Utilities (WTRG - Free Report) and SJW Group (SJW - Free Report) .
American Water Works continues to widen its market footprint through strategic acquisitions. In September 2022, AWK’s subsidiary, Illinois American Water, acquired the water and wastewater system assets of the City of Villa Grove, IL, for $11 million. The acquisition will add 1,489 water and 1,069 wastewater customers to the company’s existing base of 1.3 million.
During the six years ended Dec 31, 2021, Essential Utilities expanded utility operations by completing many water and wastewater acquisitions, which added 94,000 new customers. In the first quarter of 2022, the company completed one acquisition, which added 11,000 customers.
In January 2022, SJW Group closed the acquisition of Texas Country Water in Comal, TX. The acquisition added more than 1,900 water and wastewater customers to the existing customer base. This is the fourth Texas acquisition by SJW Group in the past 12 months.
The Zacks Consensus Estimate for AWK, WTRG and SJW’s 2022 earnings implies year-over-year growth of 4.5%, 6.6% and 15.3%, respectively.