Back to top

Image: Shutterstock

American Water's (AWK) Pennsylvania Arm to Invest in Upgrade

Read MoreHide Full Article

American Water Works (AWK - Free Report) announced that its unit, Pennsylvania American Water, will invest $4 million to upgrade 5,200 feet of water mains along North Main Avenue, Scranton. This new upgrade will provide high-quality, reliable and affordable water service and fire protection to the customers in the region.

The company will upgrade the water mains that are older than a century and are experiencing leaks, resulting in the wastage of potable water. Per the upgrade project, company contractors will install new 20- and 24-inch ductile iron pipes to replace the six- and 16-inch water mains along North Main Avenue, from Parker Street to Viewmont Drive. A larger diameter of the main will allow the company to handle system demands better and provide more reliable service to its expanding customer base.

Pennsylvanian American Water has been upgrading and maintaining its water and wastewater infrastructure. It has invested nearly $490 million in 2022 for infrastructure upgrades.

The company will continue to invest to make essential upgrades and maintain aging assets in the long term.

Investment Needed for the Aging Water Industry

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 infrastructure, like water mains, storage tanks and purifying units, needs maintenance at proper intervals.

The repair and upgrade of other infrastructures like overhead storage tanks, treatment plants and water reservoirs are essential to providing uninterrupted 24x7 services to customers.

Miles of aging pipelines essentially require repairs and upgrades to maintain quality water and wastewater services. A delay in repair could cause frequent disruptions in the 24x7 supply of potable water and sewer services.

Utilities Making Investments

America Water aims to invest $3.1 billion in 2024, with a major portion utilized for infrastructure improvements in Regulated Businesses. Over the long term, AWK aims to invest in the range of $16-17 billion in the 2024-2028 time period and $34-$38 billion in the 2024-2033 time period.

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 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 with the help of improved information technology.

California Water Service plans to invest more than $725 million in capital expenditures through 2024.

Middlesex Water plans to invest $181 million during 2024-2025 to strengthen its water and wastewater infrastructure and provide services to customers in a safe, reliable and efficient manner.

The Zacks Consensus Estimate for WTRG and CWT’s 2023 earnings indicates year-over-year growth of 5.1% and 7.9%, respectively. 

Price Performance

Over the last month, American Water Works’ stock has increased by 4.2% compared with the industry’s 4.3% growth.


Zacks Investment Research
Image Source: Zacks Investment Research

Zacks Rank

American Water currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Published in