Middlesex Water Company (MSEX - Free Report) recently announced that it is all set to commence its water infrastructure upgrade in the Avenel section of Woodbridge Township, NJ. The company will invest $11.2 million for the renovation or replacement of its aging water facilities.
Notably, this latest upgrade comes under the company’s RENEW Program, an initiative undertaken to strengthen its water distribution infrastructure as well as water quality. As part of this program, the company aims to replace 4.8 miles of water mains, service lines, valves and fire hydrants. With the new mains, possessing greater water carrying capacity, being installed, this project will allow the company to improve its performance of fire flows and overall service quality.
The entire RENEW project will take nearly six months for completion. However, individual customer would be affected only for a few days with the service being transferred from old to the new main.
Ongoing Maintenance Work
Realizing the need for providing better water utility services, Middlesex Water has been making notable investments in infrastructural upgrades, in recent times like the latest one. In line with this, the company had announced a similar water infrastructure overhaul on May 31, 2017. Under this project, it planned to embark on a $10-million project to replace weathered water infrastructure in the Borough of South Plainfield, NJ. The company aimed at replacing 27,000 feet of water mains, service lines, valves, fire hydrants and meters.
To consistently offer quality water services, the company has an objective to invest nearly $267 million during 2018-2020 time period for installation and relocation of water mains, service lines, wastewater collection system and setup of a new storage tank. This investment includes $34 million of spending on the RENEW program.
Also, the company plans to invest $42 million in the main water treatment plant upgrade, $52 million to construct a large-diameter transmission pipeline in New Jersey and $18 million to relocate water meters from inside customers’ premises to exterior meter pits. Such significant investments should allow the company to serve its customers better, going ahead.
Water Industry Needs Investment
The U.S. water infrastructure is quite old and therefore, a massive investment is required to revamp the existing water and wastewater systems. Some of the water mains are nearly a century old and require immediate repair. Replacement of old transmission mains and renewal of treatment plants require hefty investments for restoring the water infrastructure to regain its lost shine. Considering this, other water utility providers are also following suit.
Water utility American Water Works (AWK - Free Report) plans to invest in the range of $1.9-$2.1 billion for capital expenditures and acquisitions. The company aims at pumping $8.0-$8.6 billion into the mending activity from 2018 through 2022, which will help improve the company’s earnings by 7-10% per year in the period from a 2016 base.
Another water utility Aqua America (WTR - Free Report) wants to invest in the range of more than $1.4 billion in the 2018-2020 time frame.
Shares of Middlesex Water have returned 12.3% in the past year, outperforming the 1.8% growth of the industry it belongs to.
Zacks Rank & Key Pick
Currently, Middlesex Water has a Zacks Rank #3 (Hold). A better-ranked stock in the same space is Global Water Resources Inc. (GWRS - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Global Water Resources’ long-term EPS is expected to grow 15%. The consensus estimate for 2018 bottom line has moved 21.4% north to 17 cents over the past 60 days.
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