American Water Works (AWK) Iowa Arm Invests $4M in Upgrades
American Water Works AWK recently announced that its unit, Iowa American Water, has invested nearly $4 million in two 2023 projects to upgrade and expand its water infrastructure. In the first project, the company invested $3.5 million in its Blue Grass water system, which includes the construction of a new elevated water storage tank and the installation of almost two miles of a new 12-inch water transmission main. Per the second project, the company invested $0.5 million and refurbished two elevated storage tanks with a combined capacity of one million gallons.
Iowa American Water has been investing steadily in infrastructure improvements, such as replacing aging water pipes, upgrading water treatment facilities and refurbishing water storage tanks. Such maintenance investments at regular intervals allow the company to further improve the quality of its services and serve customers efficiently.
Investments Essential for Water Industry
Aging water and wastewater infrastructure is a major headwind for the water industry. It is evident from the findings of the American Society of Civil Engineers (ASCE) that due to the delay in pipeline repairs and maintenance, 6 billion gallons of treated water is lost every day in the United States. Delays in the repair and maintenance of the infrastructure could increase the problem further.
Per the U.S. Environmental Protection Agency, investments of $473 billion and $271 billion are necessary to maintain and expand drinking water and wastewater pipelines, respectively, to meet demand over the next 20 years. Water infrastructure like storage tanks and purifying units, as well as miles of water mains, needs maintenance at proper intervals.
American Water Works is making regular investments to maintain its infrastructure. It aims to invest in the range of $14-$15 billion in the 2023-2027 period and $30-$34 billion for 10 years from 2023-2032. Last week, Pennsylvania American Water decided to invest $17.5 million in 2023 to upgrade and maintain eight of its water storage tanks and construct five new tanks to cater to the rising demand for water.
Utilities Making Investment
Water utilities like Essential Utilities WTRG, California Water Service Group CWT and Middlesex Water MSEX have well-chalked-out capital investment plans to strengthen their infrastructure.
Essential Utilities plans to invest $1.1 billion in 2023 and $3.3 billion through 2025 to improve the water and natural gas systems and better serve customers using improved information technology.
California Water Service plans to invest more than $725 million in capital expenditures through 2024.
Middlesex Water plans to invest $266 million during 2023-2025 to strengthen its water and wastewater infrastructure and provide services to customers in a safe, reliable and efficient manner.
The above investments might appear to be very small compared with the total requirements needed for repair and upgrades but are undeniably a positive move to address the aging water and wastewater infrastructure.
Price Performance
Shares of AWK have rallied 3.8% in the past month compared with the industry’s 2.8% growth.
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Zacks Rank
American Water Works currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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American Water Works Company, Inc. (AWK) : Free Stock Analysis Report
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