American Water Works AWK announced that its subsidiary, New Jersey American Water, will continue with planned infrastructure projects across its service areas amid the novel coronavirus threat. Infrastructure maintenance and upgrades at regularly intervals are quite essential to ensure reliable potable water and wastewater services to customers.
New Jersey American Water provides water and wastewater services to nearly 2.8 million people in its service territories. The best possible way to avoid infection from the contagious COVID-19 is through social distancing and washing hands properly with soap at frequent intervals.
Why Infrastructure Upgrade Is Essential
Per the American Water Works Association report, a significant number of water lines burst in the country everyday due to the aging of existing water and wastewater infrastructure. Water main line breaks not only disrupt the supply of potable water but also increase the risk of contamination, which can be harmful for consumers. Moreover, to lower the threat of COVID-19, clean water is absolutely essential. Upgrades and repair of old and soiled pipelines will ensure avoidance of pipeline breaks.
American Water is quite active in upgrading and maintaining its existing assets. The company has plans to invest $8.8-$9.4 billion in the 2020-2024 time period and $20-$22 billion in the next decade. The near-zero interest rates will assist the company to source funds at a cheaper rate and carry on infrastructure strengthening work.
Initiatives to Face Challenges Created by COVID-19
The global economy is being adversely hit by the impact of novel coronavirus. Nearly 3.3 million people have filed unemployment claims in the United States, as the COVID-19 pandemic has resulted in the shutdown of major activities in the country. With more people across the United States getting infected by the virus, the financial distress might further increase.
Amid such financial stress on consumers, water utilities like American Water Works and California Water Service Group CWT, among others, have decided to continue providing services to customers even if they fail to clear their utility dues within time.
However, the $2 trillion stimulus package will help consumers cope up with the economic distress caused by the coronavirus pandemic.
Currently, American Water has a Zacks Rank #3. Some better-ranked stocks in the same industry are American States Water Company AWR and Middlesex Water Company MSEX. American States Water sports a Zacks Rank #1 (Strong Buy) and Middlesex Water has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here
American States Water and Middlesex Water delivered respective trailing four-quarter positive earnings surprise of 6.47% and 4.69%, on average.
The Zacks Consensus Estimate for 2020 earnings per share for American States Water and Middlesex Water has moved up 3.2% and 1.5%, respectively, in the past 60 days.
Shares of the company have outperformed its industry in the past 12 months.
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