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American Water (AWK) to Invest $1.9M in Water System in Missouri

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·4 min read
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American Water Works AWK announced that its unit, Missouri American Water, is going to invest $1.9 million to replace several thousand feet of aging water main in Missouri to ensure high-quality potable water services for customers. Replacement of the aging water mains started from March and will continue till September.

Miles of water mains are aging and nearing the end of its effective service life as a consequence of frequent breakage, which is resulting in the wastage of valuable potable water. Timely repair and maintenance of aging pipelines, along with expansion of the existing water infrastructure are quite essential to meet the rising demand for potable water.

Missouri American Water has been investing on a regular basis to upgrade its existing water and wastewater infrastructure, as well as expand operations through strategic acquisitions. This upgrade of water mains is part of its multimillion-dollar initiative to replace the aging water infrastructure.

Regular Investment Serves as Lifeline for Pipelines

Potable water supply on a 24x7 basis is essential for maintaining hygiene and meeting daily chores. Millions of miles of pipelines, storage tanks, pumps, desalination plants, and water refineries work in tandem to deliver clean, as well as potable water for meeting daily requirements. However, aging of water and wastewater infrastructure, as well as water main failures are the biggest concerns for water utilities.

The only solution to the above problem is to update and replace the aging water infrastructure at regular intervals but a huge amount of investment is required to do the same. Per the Water and Wastewater Equipment Manufacturers Association, an estimated $750 billion investment is necessary to maintain and expand the drinking water and wastewater service to meet demand over the next 20 years. American Water continues to make investments in its infrastructure to upgrade, enhance and maintain the same. The company has plans to invest $10.4 billion in the 2021-2025 time period and $22-$25 billion in the next decade.

Essential Utilities WTRG is also making regular investments to upgrade the existing water and wastewater systems. Its long-term plan is to invest nearly $3 billion through 2023 to rehabilitate and strengthen water, as well as natural gas pipeline systems. Another water utility, Global Water Resources GWRS is making acquisitions and the necessary investments to expand as well as strengthen operations, along with upgrade the acquired assets for providing efficient services to customers.

Price Performance

Shares of American Water have outperformed the industry in the past year.

Zacks Rank and Key Pick

American Water currently has a Zacks Rank #3 (Hold). A better-ranked stock in the same industry is California Water Service Group CWT, currently having a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

California Water Service currently has a dividend yield of 1.64%, which is better than the industry average. The Zacks Consensus Estimate for 2021 and 2022 earnings per share of the company has moved up 3.5% and 6.8%, respectively, in the past 60 days.

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American Water Works Company, Inc. (AWK) : Free Stock Analysis Report

California Water Service Group (CWT) : Free Stock Analysis Report

Global Water Resources, Inc. (GWRS) : Free Stock Analysis Report

Essential Utilities Inc. (WTRG) : Free Stock Analysis Report

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