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American Water Arm to Invest $6.7M in Illinois Water System

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American Water Works (AWK - Free Report) announced that its subsidiary, Illinois American Water will invest $6.7 million to replace 4.2 miles of water mains in a local water system. In addition, the company will upgrade the Grand Boulevard pump station with energy saving technology.

Upgrades and replacement of old water mains are essential to prevent the wastage of potable water. The new upgrades planned by Illinois American Water include larger-sized water mains to support water flow and pressure for superior water quality and fire protection. The replacement of two distribution pumps will enable better control flow and increase water pressure in the North Peoria service area.

Illinois American Water is quite active in repairing and upgrading its water and wastewater infrastructure. Last week, the company decided to invest $5.9 million to upgrade the Sterling Water System, a local water system.

Upgrade and Repair are Essential

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. Hence, regular investment in this aging and fragmented water industry is quite essential to prevent the wastage of potable water.

So, it is quite essential to make repairs and upgrade the old and soiled water and wastewater mains to prevent wastage and lower the possibility of potable water contamination. American Water Works is quite active in making regular investments in its service territories and maintaining the water mains. 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. These investments will allow it to maintain and expand its existing water infrastructure and provide reliable water services to the expanding customer base.

In addition to American Water, Essential Utilities (WTRG - Free Report) is also making regular investments in water and wastewater systems. Its long-term plan is to invest $2.8 billion in the 2020-2022 time period to rehabilitate and strengthen the existing water and natural gas pipeline systems.

Price Performance

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



Zacks Rank and Key Picks

Currently, the company has a Zacks Rank #3 (Hold). A couple of top-ranked water utilities include American States Water Company (AWR - Free Report) and Middlesex Water Company (MSEX - Free Report) , each presently holding a Zacks Rank #2 (Buy). 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 5.9% in the last four quarters. The Zacks Consensus Estimate for 2020 earnings has moved up 1.8% in the past 90 days.

Middlesex Water Company delivered average positive earnings surprise of 2.19% in the last four quarters. The Zacks Consensus Estimate for 2020 earnings has moved up 2.5% in the past 90 days.

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