American Water's (AWK) Indiana Arm Invests $97M in Upgrades
American Water Works AWK announced that its unit, Indiana American Water, invested $97 million to replace or remove almost 30,000 lead service lines in its service areas across the state. The company has been working continuously to replace the lead lines from its service territories. Since 2018, Indiana American Water has replaced nearly 54% of the lead lines in its service territories.
AWK is committed to removing and replacing the remaining lead lines from its service territories. The firm recently applied and received approval for nearly $19 million in no- or low-interest loans from the Indiana State Revolving Fund, which will assist it in expediting the process of lead service line replacement.
Aging Water Industry Needs Upgrade
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 water mains, storage tanks and purifying units, needs maintenance at proper intervals.
The repair and upgrade of other infrastructures like overhead storage tanks, treatment plants and water reservoirs are essential to providing uninterrupted 24x7 services to customers.
Miles of aging pipelines essentially require repairs and upgrades to maintain quality water and wastewater services. A delay in repair could cause frequent disruptions in the 24x7 supply of potable water and sewer services. Leaks and accidents in the water mains result in the wastage of millions of gallons of potable water.
Investments From Utilities
America Water aims to invest $3.1 billion in 2024, with a significant portion utilized for infrastructure improvements in Regulated Businesses. Over the long term, AWK aims to invest in the range of $16-$17 billion in the 2024-2028 time period and $34-$38 billion in the 2024-2033 time period.
Other water utilities, like Essential Utilities WTRG and California Water Service Group CWT, among others, have well-chalked-out capital investment plans to strengthen 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 with the help of improved information technology.
California Water Service plans to invest more than $725 million in capital expenditures through 2024.
The Zacks Consensus Estimate for WTRG and CWT’s 2023 earnings indicates year-over-year growth of 5.1% and 7.9%, respectively.
Price Performance
Over the last month, American Water Works’ stock gained 7.3% compared with the industry’s 7.4% growth.
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Zacks Rank & Another Stock to Consider
American Water currently has a Zacks Rank #2 (Buy).
Another top-ranked company from the same industry is Global Water Resources GWRS. The company currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
GWRS’ long-term (three- to five-year) earnings growth rate is pegged at 15%. The Zacks Consensus Estimate for 2023 earnings of 29 cents per share reflects an increase of 7.4% over 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
