American Water's (AWK) Pennsylvania Arm to Invest in Upgrades
American Water Works AWK announced that its unit, Pennsylvania American Water, will invest $0.6 million to install 2,900 feet of new water main in Exeter Township, Berks County. This new water main will also connect two portions of the system, will benefit a large portion of Exeter Township by providing better water quality and new fire protection to nearly 50 premises.
The Pennsylvanian unit has been upgrading and maintaining its water and wastewater infrastructure by replacing old water mains methodically and has invested nearly $490 million in 2022 for infrastructure upgrades. Proper infrastructure maintenance allows Pennsylvania American Water to serve its 2.3 million customers more efficiently.
Urgent Upgrade is Necessary
Per the ASCE report, nearly 6 billion gallons of treated water is lost each day in the United States due to water main breaks every two minutes. This wastage of potable water is no doubt increasing the cost of operation for water utilities.
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.
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.
Utilities are Investing
American Water Works aims to invest $2.9 billion in 2023 to strengthen and expand its water and wastewater infrastructure. The company has an extensive long-term plan to upgrade and expand its infrastructure.
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. The Zacks Consensus Estimate for WTRG’s 2023 earnings indicates year-over-year growth of 5.1%. The long-term (three- to five-year) earnings growth of the company is currently pegged at 5.6%. The current dividend yield of Essential Utilities is 3.3%.
California Water Service plans to invest more than $625 million in capital expenditures through 2024. The Zacks Consensus Estimate for CWT’s 2023 earnings indicates year-over-year growth of 7.9%. The current dividend yield of the company is 2.1%.
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 MSEX’s 2023 and 2024 revenues indicates year-over-year growth of 5.9% and 5.5%, respectively. The current dividend yield of the company is 1.6%.
Price Performance
Over the last six months, American Water Works’ stock lost 0.1% against the industry’s rally of 0.9%.
Image Source: Zacks Investment Research
Zacks Rank
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
