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American Water Unit Spends $0.3M, Upgrades Wastewater System

Zacks Equity Research

American Water Works Company AWK announced that its subsidiary Missouri American Water has invested $350,000 to upgrade the Rogue Creek wastewater system. Last December, the company had acquired the Rogue Creek water and wastewater systems that added 85 water and wastewater customers to its customer base in Missouri.

As part of this project, Missouri American Water replaced and upgraded many components of the Rogue Creek Wastewater Treatment Plant. The company also reused the existing wastewater, with many old parts either replaced or refurbished. In addition, the company installed a new influent sewer line to the treatment plant to replace the old and leaking line.

Consolidation Leads to Investment

Per an American Water Works Association report, more than 200,000 water lines break per year in the United States, resulting in 7 billion gallons of water leaking out of aging pipes. Hence, it is absolutely essential to replace and upgrade the old water system to prevent the wastage of precious water. Similarly, wastewater lines are also getting old, increasing the chances of contamination, unless replaced or refurbished within their service life.

American Water’s unit, within a year of acquisition of the Rogue Creek water and wastewater systems, has made the much required investment to upgrade the aging systems and extend quality services to customers.  The company continues to make regular investments to upgrade its existing water and wastewater system, and introduced a 10-year capital spending plan at a range of $20-$22 billion.

Apart from American Water, water utility like Aqua America Inc. WTR announced that it is going to invest nearly $550 million in 2019 to strengthen its water and wastewater infrastructure. This will be part of Aqua America’s investment target of more than $1.4 billion in the 2019-2021 time period.

Price Performance

Shares of American Water have outperformed the industry in the past 24 months.

Zacks Rank and Key Picks

Currently, American Water has a Zacks Rank #3 (Hold). Some better-ranked water utilities are AquaVenture Holdings Ltd. WAAS and The York Water Company YORW. AquaVenture sports a Zacks Rank #1 (Strong Buy) and The York Water Company carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AquaVenture Holdings delivered average positive earnings surprise of 15.6% in the last four quarters. The Zacks Consensus Estimate for 2019 and 2020 has moved up 9.9% and 5.2%, respectively, in the past 60 days.

The York Water Company delivered average positive earnings surprise of 2.3% in the last four quarters. The Zacks Consensus Estimate for 2019 and 2020 has moved up 1.8% and 0.9%, respectively, in the past 60 days.

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American Water Works Company, Inc. (AWK) : Free Stock Analysis Report
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The York Water Company (YORW) : Free Stock Analysis Report
Aqua America, Inc. (WTR) : Free Stock Analysis Report
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