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American Water's (AWK) New Jersey Arm to Invest in Upgrades
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American Water Works (AWK - Free Report) recently announced that its unit, New Jersey American Water, will invest $5.7 million to replace two miles of aging water mains in North Plainfield. The company will replace old six-inch water lines installed in the 1930s with new eight- and 12-inch ductile iron mains.
New Jersey American Water makes regular investments in upgrading and maintaining its pipelines and other infrastructure. These upgrades allow the company to efficiently serve its customers.
Aging Infrastructure of Water Industry
A substantial portion of the U.S. water and wastewater infrastructure has aged and is nearing the end of its effective service life. Miles of aging pipelines require repairs and upgrades to provide and maintain quality water service. A delay in repair could cause frequent disruptions in the 24x7 supply of potable water and sewer services.
Per the U.S. Environmental Protection Agency, investments of $473 billion and $271 billion are necessary to maintain and expand drinking water and wastewater pipelines, respectively, to meet demand over the next 20 years. Water infrastructures, like storage tanks and purifying units, need maintenance at proper intervals.
Utilities Making Systematic Investment
Given the above-mentioned scenario, it is evident that systematic investments to upgrade and maintain the existing infrastructure and provisions for adding new infrastructure will assist operators in meeting the rising customer demand. Water utilities are making systematic investments to replace and upgrade their aging infrastructure. The U.S. government is also providing funds to upgrade and maintain the same.
American Water Works aims to invest in the range of $14-$15 billion in the 2023-2027 period and $30-$34 billion for the 10-year period of 2023-2032. Water utilities like Essential Utilities (WTRG - Free Report) , California Water Service Group (CWT - Free Report) and Middlesex Water (MSEX - Free Report) have well chalked out capital investment plans to strengthen their infrastructure.
Essential Utilities plans to invest $1.1 billion in 2023 and $3.3 billion through 2025 to improve the water and natural gas systems and better serve customers through the use of improved information technology. The Zacks Consensus Estimate for WTRG’s 2023 earnings indicates year-over-year growth of 5.6%. The company’s long-term (three- to five-year) earnings growth is currently pegged at 6% and its current dividend yield is 2.6%.
California Water Service plans to invest more than $1 billion in capital expenditures through 2024. The Zacks Consensus Estimate for CWT’s 2023 earnings indicates year-over-year growth of 7.3%. The current dividend yield of California Water Service is 1.7%.
Middlesex Water plans to invest $266 million during 2023-2025 to strengthen its water and wastewater infrastructure and provide services in a safe, reliable and efficient manner. The Zacks Consensus Estimate for MSEX’s 2023 and 2024 revenues indicates year-over-year growth of 5.9% and 4.7%, respectively. The current dividend yield of Middlesex Water is 1.7%.
Price Performance
Shares of AWK have gained 18.3% in the past six months compared with the industry’s 16.3% growth.
Image: Shutterstock
American Water's (AWK) New Jersey Arm to Invest in Upgrades
American Water Works (AWK - Free Report) recently announced that its unit, New Jersey American Water, will invest $5.7 million to replace two miles of aging water mains in North Plainfield. The company will replace old six-inch water lines installed in the 1930s with new eight- and 12-inch ductile iron mains.
New Jersey American Water makes regular investments in upgrading and maintaining its pipelines and other infrastructure. These upgrades allow the company to efficiently serve its customers.
Aging Infrastructure of Water Industry
A substantial portion of the U.S. water and wastewater infrastructure has aged and is nearing the end of its effective service life. Miles of aging pipelines require repairs and upgrades to provide and maintain quality water service. A delay in repair could cause frequent disruptions in the 24x7 supply of potable water and sewer services.
Per the U.S. Environmental Protection Agency, investments of $473 billion and $271 billion are necessary to maintain and expand drinking water and wastewater pipelines, respectively, to meet demand over the next 20 years. Water infrastructures, like storage tanks and purifying units, need maintenance at proper intervals.
Utilities Making Systematic Investment
Given the above-mentioned scenario, it is evident that systematic investments to upgrade and maintain the existing infrastructure and provisions for adding new infrastructure will assist operators in meeting the rising customer demand. Water utilities are making systematic investments to replace and upgrade their aging infrastructure. The U.S. government is also providing funds to upgrade and maintain the same.
American Water Works aims to invest in the range of $14-$15 billion in the 2023-2027 period and $30-$34 billion for the 10-year period of 2023-2032. Water utilities like Essential Utilities (WTRG - Free Report) , California Water Service Group (CWT - Free Report) and Middlesex Water (MSEX - Free Report) have well chalked out capital investment plans to strengthen their infrastructure.
Essential Utilities plans to invest $1.1 billion in 2023 and $3.3 billion through 2025 to improve the water and natural gas systems and better serve customers through the use of improved information technology. The Zacks Consensus Estimate for WTRG’s 2023 earnings indicates year-over-year growth of 5.6%. The company’s long-term (three- to five-year) earnings growth is currently pegged at 6% and its current dividend yield is 2.6%.
California Water Service plans to invest more than $1 billion in capital expenditures through 2024. The Zacks Consensus Estimate for CWT’s 2023 earnings indicates year-over-year growth of 7.3%. The current dividend yield of California Water Service is 1.7%.
Middlesex Water plans to invest $266 million during 2023-2025 to strengthen its water and wastewater infrastructure and provide services in a safe, reliable and efficient manner. The Zacks Consensus Estimate for MSEX’s 2023 and 2024 revenues indicates year-over-year growth of 5.9% and 4.7%, respectively. The current dividend yield of Middlesex Water is 1.7%.
Price Performance
Shares of AWK have gained 18.3% in the past six months compared with the industry’s 16.3% growth.
Image Source: Zacks Investment Research
Zacks Rank
American Water Works currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.