American Water's (AWK) Pennsylvania Arm to Invest in Expansion
American Water Works AWK announced that its unit, Pennsylvania American Water, will invest $21 million to install more than 10 miles of water mains to extend public water service to portions of Washington County. This new addition in water mains will provide high-quality, reliable, and affordable water service and fire protection to the Avella School District and surrounding communities.
The expansion of infrastructure is essential to meet the increasing demand for water from the expanding customer base. Since 2007, the company has extended more than 60 miles of water mains in Washington County, thus bringing public drinking water to more than 800 customers.
Pennsylvanian American Water has been upgrading and maintaining its water and wastewater infrastructure and has invested nearly $490 million in 2022 for infrastructure upgrades. The company has invested and will continue to invest to make essential upgrades and maintenance of aging assets in the long term.
Investment Essential for Water Industry
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, needs maintenance at proper intervals.
The repair and upgrade of other infrastructures like overhead storage tanks, treatment plants and water reservoirs are quite essential to provide uninterrupted 24x7 services to customers.
Miles of aging pipelines essentially require repairs and upgrades to maintain quality water service. A delay in repair could cause frequent disruptions in the 24x7 supply of potable water and sewer services.
Utilities Making Investments
Water utilities like Essential Utilities WTRG, California Water Service Group CWT and Middlesex Water MSEX, 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 $625 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 Zacks Consensus Estimate for WTRG and CWT’s 2023 earnings indicates year-over-year growth of 5.1% and 7.9%, respectively. MSEX’s 2023 earnings estimates have moved up 0.5% in the past 60 days.
Price Performance
Over the past month, American Water Works’ stock has declined 16.1% compared with the industry’s 41.4% plunge.
Image Source: Zacks Investment Research
Zacks Ranks
American Water currently has a Zacks Rank #2 (Buy). 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
California Water Service Group (CWT) : Free Stock Analysis Report
Middlesex Water Company (MSEX) : Free Stock Analysis Report
Essential Utilities Inc. (WTRG) : Free Stock Analysis Report
