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American Water Unit to Invest $4.2M to Replace Water Mains

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American Water Works Company (AWK - Free Report) announced that its subsidiary, New Jersey American Water, will invest in excess of $4.2 million to replace the old water mains in North Plainfield and Cranford.
The company aims to replace 12,430 feet of old water mains with ductile iron pipes, which has already reached the end of its useful life. In addition, American Water Works’ unit will also install 870 feet of new water main in Parkview Avenue in North Plainfield.

If the weather permits, construction in North Plainfield is expected to be completed by the end of July and final street restoration will be completed in the fall of 2017. Meanwhile, the construction in Cranford will be completed by the end of April/early May and final street restoration will be completed in late spring of 2017.

Maintenance Work is on

The company, along with its subsidiaries, continues to strengthen the existing infrastructure by replacing old and damaged pipelines. Last month, New Jersey American Water announced that it will invest nearly $3.5 million to replace the old water mains installed in the Asbury Park, Neptune Township and Ocean Township service areas in Monmouth County. (Read more: American Water Works to Invest $3.5M to Replace Water Mains)

For 2017, American Water Works’ capital investment budget is $1.5 billion. The company aims to invest $6.7–$7.3 billion from 2017 through 2021.

World Water Day

World Water Day is observed each year on Mar 22, to focus on water related issues and advocate ways to efficiently manage and utilize freshwater and wastewater. This year, the focus was on reducing and reusing wastewater. This is primarily because nearly 80% of all the wastewater released from homes, cities, industry and agriculture flows back to nature, polluting the environment and losing valuable nutrients and other recoverable materials.

American Water Works is doing its bit through proper testing, compliance and treatment of water. Its dedicated team helps it to achieve state and federal drinking water and wastewater standards.

Need for Investment in Water Space

The overall water infrastructure in U.S. is quite old and almost near the end of its life. Some of the water mains are nearly a century old and require immediate replacement.  In addition, the increase in customers calls for addition of new water mains. Hence, all big operators in this fragmented water utility space are investing on a regular basis to upgrade and improve the quality of their existing infrastructure.

Aqua America Inc. (WTR - Free Report) , another water utility, has plans to make capital investments of over $450 million in 2017 as part of an ambitious investment target of over $1.2 billion in the 2017-2019 period. Connecticut Water Service Inc. aims to invest more than $150 million in the 2017-2019 time frame to strengthen its existing water infrastructure.

Price Movement

In the last three months, American Water Works’ shares have returned 5.6%, outperforming the Zacks categorized Utility-Water Supply industry’s increase of 4.5%.

This water utility is well poised to benefit from regulated investments to strengthen existing infrastructure and strategic acquisition, which, in turn, is expanding customer base and providing a boost to the top line.

Zacks Rank

American Water Works currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the same space is Artesian Resources Corporation , sporting a Zacks Rank #1 (Strong Buy). You can see tthe complete list of today’s Zacks #1 Rank stocks here.

Artesian Resources Corporation’s 2017 Zacks Consensus Estimate moved up by 6.4% to $1.49 per share in the last 60 days.

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