American Water Works Company (AWK - Free Report) announced that its subsidiary, Illinois American Water will invest $5.7 million in 2017 to replace aging water mains and install 11 pressure-reducing valves in the system’s high service zone in Peoria.
The company aims to replace 21,000 feet of old pipelines. The new pressure reducing valves will lower water pressure in the water mains to permissible level reducing the possibility of water main breakdown.
American Water Works, along with its subsidiaries, continues to strengthen the existing infrastructure. On the other hand, it is also replacing old and damaged pipelines, upgrading water treatment plants and rehabilitating the water storage facilities with the help of its units.
Last week one of the company’s subsidiaries, New Jersey American Water announced its intention to invest $4 million to replace 11,000 feet of old pipelines. (Read more: American Water Unit to Invest $4M for Replacing Old Pipes)
Investment Essential for Water Space
The United States water infrastructure in pretty old and massive investment is required to upgrade the existing water and wastewater systems. Some of the water mains are nearly a century old and require immediate replacement.
American Water Works aims to invest $5.9 billion from 2017 through 2021. In the past couple of months, the company has been very active in expanding operations through acquisitions and upgrading its existing infrastructure. It provides water and waste water services to nearly 15 million customers.
Aqua America Inc. (WTR - Free Report) , another utility, has plans to make capital investments of more than $450 million in 2017 as part of an ambitious investment target of more than $1.2 billion in the 2017-2019 period. Connecticut Water Service Inc. (CTWS - Free Report) aims to invest more than $150 million in the 2017-2019 time period to strengthen its existing infrastructure.
American Water Works’ stock has gained 4.1% in the last six months, outperforming the 2.1% rally of the industry.
The company is well poised to benefit from strategic acquisitions and regulated investments to strengthen the existing infrastructure, which, in turn, is expanding customer base and providing a boost to its top line.
American Water Works currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stock to Consider
A better-ranked stock in the same space is SJW Corporation (SJW - Free Report) currently sporting a Zacks Rank #1.
SJW Corporation reported positive earnings surprises in three out of last four quarters with an average surprise of 23.9%. The Zacks Consensus Estimate for earnings is $2.47 on revenues of $361 million for 2017. The bottom line reflects a 2.5% year-over-year rise and the top-line projection is 6.3% higher.
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