Aqua America Inc. (WTR - Free Report) announced that its unit, Aqua Illinois has acquired the water and wastewater assets of Peotone Village. This acquisition was completed on Oct 1, which added 3,000 customers, helping the company to reach the 1-million customer milestone.
At present, Aqua America operates nearly 1,700 water and wastewater systems. It has completed nearly 300 acquisitions since 1995. Acquisitions and organic growth have helped the company to expand its operations.
Consolidation is Essential in Water Space
A recent study from Utah State University showed that overall water main break over the past 6-year period has gone up 27% in the United States and Canada. The primary reasons behind water main failure are the aging water infrastructure and higher failure rates of smaller water utilities compared with larger ones.
Since the existing water infrastructure in the United States is aging, proper maintenance and upgradation of the system will require investment of billions of dollars, which becomes difficult for small water utilities to make arrangement for.
Aqua America invested nearly $2.2 billion to improve water and wastewater infrastructure since 2012 and has plans to invest nearly $1.4 billion through 2020 to improve infrastructure, in turn increasing the reliability of its services. The company has entered into an agreement to acquire more water and waste water systems. Its existing customer base will be further expanded by 23,000, on completion of these acquisitions.
American Water Works (AWK - Free Report) is one of the most active players, which continues to widen its market reach through acquisitions. In the first half of 2018, the company added 5,600 new customers through completed acquisitions. The pending acquisition agreement, on completion, will add nearly 57,000 customer connection to its existing customer base.
Another water utility, Global Water Resources (GWRS - Free Report) entered into an agreement to acquire four utilities in the past 18 months, in a bid to augment organic growth.
Zacks Rank & Another Key Pick
Aqua America currently has a Zacks Rank #2 (Buy). Another top-ranked stock in the same industry is Middlesex Water Company (MSEX - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Middlesex Water Company delivered an average positive earnings surprise of 6.83% in the trailing four quarters. Earnings estimates of the company have moved up 17.9% to $1.84 in the past 30 days.
Shares of both Aqua America and Middlesex Water Company have gained against its industry’s decline in a year’s time.
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