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California Water Service Group (CWT) Unit Buys Water System
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California Water Service Group (CWT - Free Report) announced that its subsidiary California Water Service (Cal Water) acquired the municipal water system assets of the City of Willows.
Consolidation of small municipal public water systems eases the financial burden of maintenance and treatment while ensuring clean and safe drinking water is available to customers in rural areas like the City of Willows.
Timely repairs and maintenance of aging water and wastewater infrastructure are crucial to providing high-quality 24x7 services to customers. Cal Water has been providing water utility services to the majority of Willows, CA, since 1927. It has installed a new water main and individual service lines to connect its new customers to the new main.
California Water Service Group has been expanding its operation through systematic acquisitions and by investing in the acquired assets to ensure reliable services are provided to its customers. Recently, Hawaii Water Service (Hawaii Water) and New Mexico Water Service (New Mexico Water), both subsidiaries of California Water Service Group, have acquired the assets of HOH Utilities, LLC (HOH Utilities) and Monterey Water Company (Monterey), respectively.
Aging Water Infrastructure
The water and wastewater industry is highly fragmented and needs consolidation. The water and wastewater infrastructure is also getting old and requires major investments for upgrades.
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, such as water mains, storage tanks and purifying units, needs maintenance at proper intervals.
The repair and upgrade of other infrastructure, such as overhead storage tanks, treatment plants and water reservoirs, are essential to providing uninterrupted 24x7 services to customers. California Water Service Group plans to invest $725 million through 2024 to upgrade its aging infrastructure and expand operations.
Other water utilities, including American Water Works (AWK - Free Report) and Essential Utilities (WTRG - Free Report) , have well-chalked-out capital investment plans to strengthen infrastructure. The companies are also filing rate case applications to the respective commissions to recoup the invested amount and carry out infrastructure upgrade work.
American Water Works aims to invest $16-$17 billion in the 2024-2028 period, and Essential Utilities plans to invest $1.1 billion in 2023 and $3.3 billion through 2025 to upgrade infrastructure.
AWK has been benefiting from a rate increase. The new rates, effective Jan 1, 2023, will add $359 million to annual revenues. The pending rate case, if approved without any change, will further increase the top line by $194 million.
The Zacks Consensus Estimate for American Water Works and Essential Utilities’ 2024 earnings per share reflects year-over-year growth of 6.8% and 7.4%, respectively.
Price Performance
Over the past three months, shares of CWT have gained 0.8% compared with the industry’s 13.6% growth.
CWCO’s long-term (three- to five-year) earnings growth rate is pegged at 8%. The Zacks Consensus Estimate for 2024 earnings of $1.23 per share reflects an increase of 6.1% over the past 60 days.
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California Water Service Group (CWT) Unit Buys Water System
California Water Service Group (CWT - Free Report) announced that its subsidiary California Water Service (Cal Water) acquired the municipal water system assets of the City of Willows.
Consolidation of small municipal public water systems eases the financial burden of maintenance and treatment while ensuring clean and safe drinking water is available to customers in rural areas like the City of Willows.
Timely repairs and maintenance of aging water and wastewater infrastructure are crucial to providing high-quality 24x7 services to customers. Cal Water has been providing water utility services to the majority of Willows, CA, since 1927. It has installed a new water main and individual service lines to connect its new customers to the new main.
California Water Service Group has been expanding its operation through systematic acquisitions and by investing in the acquired assets to ensure reliable services are provided to its customers. Recently, Hawaii Water Service (Hawaii Water) and New Mexico Water Service (New Mexico Water), both subsidiaries of California Water Service Group, have acquired the assets of HOH Utilities, LLC (HOH Utilities) and Monterey Water Company (Monterey), respectively.
Aging Water Infrastructure
The water and wastewater industry is highly fragmented and needs consolidation. The water and wastewater infrastructure is also getting old and requires major investments for upgrades.
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, such as water mains, storage tanks and purifying units, needs maintenance at proper intervals.
The repair and upgrade of other infrastructure, such as overhead storage tanks, treatment plants and water reservoirs, are essential to providing uninterrupted 24x7 services to customers. California Water Service Group plans to invest $725 million through 2024 to upgrade its aging infrastructure and expand operations.
Other water utilities, including American Water Works (AWK - Free Report) and Essential Utilities (WTRG - Free Report) , have well-chalked-out capital investment plans to strengthen infrastructure. The companies are also filing rate case applications to the respective commissions to recoup the invested amount and carry out infrastructure upgrade work.
American Water Works aims to invest $16-$17 billion in the 2024-2028 period, and Essential Utilities plans to invest $1.1 billion in 2023 and $3.3 billion through 2025 to upgrade infrastructure.
AWK has been benefiting from a rate increase. The new rates, effective Jan 1, 2023, will add $359 million to annual revenues. The pending rate case, if approved without any change, will further increase the top line by $194 million.
The Zacks Consensus Estimate for American Water Works and Essential Utilities’ 2024 earnings per share reflects year-over-year growth of 6.8% and 7.4%, respectively.
Price Performance
Over the past three months, shares of CWT have gained 0.8% compared with the industry’s 13.6% growth.
Image Source: Zacks Investment Research
Zacks Rank & Another Stock to Consider
CWT currently has a Zacks Rank #2 (Buy).
Another top-ranked company from the same industry is Consolidated Water (CWCO - Free Report) , which currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CWCO’s long-term (three- to five-year) earnings growth rate is pegged at 8%. The Zacks Consensus Estimate for 2024 earnings of $1.23 per share reflects an increase of 6.1% over the past 60 days.