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American Water (AWK) Arm to Replace Water Mains in Illinois

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American Water Works (AWK - Free Report) announced that its subsidiary, Illinois American Water will invest $2.9 million to replace 9,700 feet of water mains in the City of Pekin water system. The reasons behind replacing the aging water mains are to stop wastage through leakage, increase the size of new pipelines to improve water pressure for customers and assist in fire protection requirements.

Illinois American Water provides reliable water and wastewater services to 1.3 million people in Illinois.  Through the water main replacement program, Illinois American Water focuses on replacing mains wherein leaks occur and increases the size of the pipe that is no longer sufficient to meet demand from customers.

The above investment is part of American Water’s infrastructure update plan for 2020. American Water continues to make repairs and replacements, as well as upgrade its existing water and wastewater infrastructure to provide high-quality services to the expanding customer base. American Water Works has plans to invest $8.8-$9.4 billion in the 2020-2024 time period and $20-$22 billion in the next decade.

Repairs Essential to Stop Wastage

Per the World Health Organization, washing hands with soap at regular intervals and maintaining social distancing are crucial measures to prevent the spread of the novel coronavirus. Hence, the continuous supply of water is essential.

Water mains of the United States are gradually approaching the end of effective service life. Per a finding from American Society of Civil Engineers, there are 240,000 water main breaks per year in the United States, resulting in the wastage of more than 2 trillion gallons of treated drinking water.

So, regular investment is quite essential to upgrade the water infrastructure for ensuring 24x7 continuous water and wastewater services. Despite the current COVID-19 crisis, water utilities like Middlesex Water Company (MSEX - Free Report) are continuing with construction projects designed to maintain and enhance the reliability and resiliency of water treatment and distribution systems.    

Zacks Rank & Key Picks

Currently, American Water has a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the same industry include American States Water Company (AWR - Free Report) and The York Water Company (YORW - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

American States Water delivered average positive earnings surprise of 6.5% in the last four quarters. The Zacks Consensus Estimate for 2020 earnings has moved up 1.8% in the past 90 days.

York Water delivered average positive earnings surprise of 13.6% in the last four quarters. The Zacks Consensus Estimate for 2020 earnings of $1.21 per share indicates year-over-year growth of 9%.

Price Performance

Shares of American Water have outperformed the industry in the past 12 months.

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