American Water Works AWK announced that its subsidiary, Illinois American Water will invest $5.9 million to upgrade the Sterling Water System, a local water system. Upgrade and maintenance of water and wastewater infrastructure is quite essential to provide uninterrupted service to customers, as much of the water infrastructure is heading toward the end of useful life.
Through this project, Illinois American Water will replace a high service pump station at the water treatment plant and construct a new, larger elevated water tank on the north side of town.
Illinois American Works not only expands operations through acquisitions but also makes adequate efforts to maintain and upgrade the expanding water infrastructure in the state. Earlier this week, the company announced plans to invest $2.9 million to replace 9,700 feet of water mains in the City of Pekin water system.
Illinois American Water provides reliable water and wastewater services to 1.3 million people in Illinois. Repairs and upgrades make its services reliable to customers.
Investment to Support Aging Water Systems
Per the U.S. Environmental Protection Agency, more than $744 billion is needed for U.S. water and wastewater infrastructure improvement. Also, 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.
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.
In addition to American Water, Essential Utilities WTRG 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.
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 top-ranked water utilities include American States Water Company AWR and Middlesex Water Company MSEX, 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 1% in the past 90 days.
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Middlesex Water Company (MSEX) : Free Stock Analysis Report
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Essential Utilities Inc. (WTRG) : Free Stock Analysis Report
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