American Water Works’ (AWK - Free Report) subsidiary — Illinois American Water — recently announced plans to invest approximately $16.96 million to improve water service distribution systems. In particular, investment of $14 million has been allotted for the installation and replacement of water main in Peoria District, $2.3 million in Pekin and $0.65 million in Lincoln to upgrade the distribution system.
American Water invests on a regular basis for the maintenance of water infrastructure. In this regard, the company has allocated $302 million for the same in the first quarter of 2018. Going ahead, American Water aims to invest $7.2 billion from 2018 through 2022 to strengthen regulated businesses.
Regular Investment for Aging Water Infrastructure
It’s mandatory to pay focus on the water infrastructure to provide high-quality and reliable water /wastewater services. The U.S. water infrastructure is quite old and fault in the mains can disrupt services and supply impure water to the homes. Some of the water mains are nearly a century old and require immediate replacement.
Considering the above factor, the aging infrastructure thus requires immediate attention and subsequent investments for the necessary upgradation. American Water Works, being one of the largest operators in the water utility space, is striving to fulfill these requirements and serve customers efficiently through these investments.
Capital Investments by Other Water Utilities
Other Utility - Water Supply companies, realizing the need of disruption free service, are either investing or making acquisitions to strengthen their capabilities. For instance, Aqua America Inc.(WTR - Free Report) intends to make capital investments of $500 million in 2018, which is part of its ambitious investment target of more than $1.4 billion in the 2018-2020 time period.
Moreover, the merger of Connecticut Water Service and SJW Group (SJW - Free Report) will result in one of the largest water and wastewater service entity in the United States and will serve more than 1.5 million customers in multiple states.
Zacks Rank & Price Movement
American Water Works has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In a year’s time, shares of American Water have gained 0.8% against the industry’s decline of 3.3%.
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