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American Water Works (AWK) Arm to Acquire Assets Worth $5.5M
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American Water Works (AWK - Free Report) announced that its unit, Pennsylvania American Water, has signed a deal with Farmington Township, Clarion County, to purchase the township’s water and wastewater systems for $5.545 million. This acquisition will add 1,017 new customers to Pennsylvania American Water’s customer base.
Pennsylvania American Water provides efficient water and wastewater services to its customers. The company expands its operations through strategic acquisitions and takes essential steps to upgrade the aging infrastructure of the acquired company.
This acquisition is expected to close in 2024, after all necessary regulatory approvals. After its closure, Pennsylvania American Water plans to invest more than $3 million in system improvements to meet regulatory, safety and security standards.
Consolidation of a Widely Scattered Industry
Per the American Society of Civil Engineers ("ASCE"), more than 50,000 community water systems and 16,000 community wastewater systems in the United States are currently providing water solutions to customers.
Per the ASCE findings, due to the delay in essential pipeline repairs and maintenance, 6 billion gallons of treated water is lost every day in the United States. Owing to the many small operators in the industry and a lack of adequate funds, essential infrastructural upgrades and repairs get delayed at times.
The acquisition of small units by larger utilities ensures necessary investments in infrastructure upgrades and the continuation of high-quality customer service. American Water Works is the largest and most geographically diverse publicly traded water and wastewater utility company that continues to widen its market footprint through strategic acquisitions.
American Water Works is quite active in acquiring small units in its service territories as well as expanding operations. Till Mar 31, 2023, the company completed five acquisitions in two states, which added 1,400 new customers. The pending 27 acquisitions as of Mar 31, 2023, when completed, will add another 48,200 customers.
Investments for Water Space
Per the U.S. Environmental Protection Agency (“EPA”), an estimated $744 billion investment is necessary to maintain and expand drinking water and wastewater services to meet demand over the next 20 years.
American Water Works is making regular investments to maintain its infrastructure. It aims to invest in the range of $14-$15 billion in the 2023-2027 period and $30-$34 billion for the 10 years of 2023-2032.
Other 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 water and natural gas systems and better serve customers using improved information technology.
California Water Service plans to invest more than $725 million in capital expenditures through 2024.
Middlesex Water plans to invest $266 million during 2023-2025 to strengthen its water and wastewater infrastructure and provide services to customers in a safe, reliable and efficient manner.
Price Performance
Over the past three months, American Water Works’ stock has gained 10.1% compared with the industry’s growth of 9.5%.
Image Source: Zacks Investment Research
Zacks Rank
American Water Works currently has a Zacks Rank #3 (Hold).
Image: Bigstock
American Water Works (AWK) Arm to Acquire Assets Worth $5.5M
American Water Works (AWK - Free Report) announced that its unit, Pennsylvania American Water, has signed a deal with Farmington Township, Clarion County, to purchase the township’s water and wastewater systems for $5.545 million. This acquisition will add 1,017 new customers to Pennsylvania American Water’s customer base.
Pennsylvania American Water provides efficient water and wastewater services to its customers. The company expands its operations through strategic acquisitions and takes essential steps to upgrade the aging infrastructure of the acquired company.
This acquisition is expected to close in 2024, after all necessary regulatory approvals. After its closure, Pennsylvania American Water plans to invest more than $3 million in system improvements to meet regulatory, safety and security standards.
Consolidation of a Widely Scattered Industry
Per the American Society of Civil Engineers ("ASCE"), more than 50,000 community water systems and 16,000 community wastewater systems in the United States are currently providing water solutions to customers.
Per the ASCE findings, due to the delay in essential pipeline repairs and maintenance, 6 billion gallons of treated water is lost every day in the United States. Owing to the many small operators in the industry and a lack of adequate funds, essential infrastructural upgrades and repairs get delayed at times.
The acquisition of small units by larger utilities ensures necessary investments in infrastructure upgrades and the continuation of high-quality customer service. American Water Works is the largest and most geographically diverse publicly traded water and wastewater utility company that continues to widen its market footprint through strategic acquisitions.
American Water Works is quite active in acquiring small units in its service territories as well as expanding operations. Till Mar 31, 2023, the company completed five acquisitions in two states, which added 1,400 new customers. The pending 27 acquisitions as of Mar 31, 2023, when completed, will add another 48,200 customers.
Investments for Water Space
Per the U.S. Environmental Protection Agency (“EPA”), an estimated $744 billion investment is necessary to maintain and expand drinking water and wastewater services to meet demand over the next 20 years.
American Water Works is making regular investments to maintain its infrastructure. It aims to invest in the range of $14-$15 billion in the 2023-2027 period and $30-$34 billion for the 10 years of 2023-2032.
Other 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 water and natural gas systems and better serve customers using improved information technology.
California Water Service plans to invest more than $725 million in capital expenditures through 2024.
Middlesex Water plans to invest $266 million during 2023-2025 to strengthen its water and wastewater infrastructure and provide services to customers in a safe, reliable and efficient manner.
Price Performance
Over the past three months, American Water Works’ stock has gained 10.1% compared with the industry’s growth of 9.5%.
Image Source: Zacks Investment Research
Zacks Rank
American Water Works currently has a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.