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American Water's Unit to Invest $0.7M to Replace Water Mains

·3 min read

American Water Works AWK announced that its subsidiary, New Jersey American Water is going to invest $0.7 million for replacing more than 2,200 feet of aging water mains in Bedminster. The upgrades will include replacing 4-inch water lines installed in 1930’s with new, 8-inch ductile iron mains along the entire length of Riverwood and Wildwood Avenues.

The replacement of old mains with new ones will increase the reliability of its services. This will also increase water flow for domestic consumption and help in fire protection. These upgrades are part of the company’s multimillion-dollar initiative to upgrade the existing old water and wastewater pipelines.

New Jersey American Water, through its existing water and wastewater infrastructure, provides services to nearly 2.8 million in New Jersey.

Water Infrastructure is Aging

The U.S. water and wastewater infrastructure is gradually nearing toward the end of effective service life. As a consequence, thousands of main line breaks are occurring daily, which is resulting in the wastage of millions of gallons of potable water and increasing the chances of water contamination.

Per the American Water Works Association, an estimated $1 trillion investment is necessary to maintain and expand the drinking water service to meet demand over the next 25 years. So, huge efforts are needed from private operators and funding is required from government agencies to upgrade and maintain the aging water, as well as wastewater facilities.

The large water utilities operating in the United States are making investments on a regular basis to upgrade and repair old pipelines. American Water has been a frontrunner and investing regularly to strengthen its water and wastewater infrastructure. The company has plans to invest $8.8-$9.4 billion in the 2020-2024 time period and $20-$22 billion in the next decade.

In addition to American Water, Essential Utilities WTRG is also making regular investments to upgrade the existing water and wastewater systems. Its long-term plan is to invest $2.8 billion in the 2020-2022 time period to rehabilitate and strengthen water and natural gas pipeline systems. Another water utility, California Water Service CWT recently completed the Palos Verdes Peninsula Water Reliability Project that will help it support the existing 60-year-old drinking water pipeline and provide assistance to the system during natural disasters. The company aims to invest nearly $809.0-$828.0 million in the 2019-2021 period to strengthen its infrastructure.

Price Performance

Shares of American Water have outperformed the industry in the past 12 months.

Zacks Rank & Key Pick

American Water Works currently has a Zacks Rank #3 (Hold). A better-ranked stock in the same industry is Primo Water Corporation PRMW), which carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Primo Water delivered an average earnings surprise of 65% in the last four reported quarters. The Zacks Consensus Estimate for its 2020 earnings has moved 20.9% upward to 52 cents per share in 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
Primo Water Corporation (PRMW) : Free Stock Analysis Report
Essential Utilities Inc. (WTRG) : Free Stock Analysis Report
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