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AWK Unit to Replace Aging Assets

Zacks Equity Research

American Water Works Company, Inc. (AWK) continues with its steady investment strategy of upgrading the existing infrastructure while adding new assets to its portfolio. The company announced that its subsidiary Virginia American Water will invest approximately $0.1 million to upgrade the water main in Berkeley Beach, VA.

The current investment is a part of Virginia American Water’s full-year 2013 infrastructure spending plan of $4 million. The company is expected to complete the project in roughly two months.

Per the plan, Virginia American Water will replace 1,200-feet of a 2-inch main as well as an 8-inch main along Breezewood Drive, Cliff Road and Lakeshore Drive in the Berkeley Beach subdivision.

The current project will help Virginia American Water to improve water supply reliability and quality of water besides increasing the capacity of its utility assets. In addition, this project will enhance water flow capability in the locality.

The U.S. government continues to enforce several regulations to maintain reliability in water supply. As per the U.S. Environmental Protection Agency’s report, the U.S. utility providers need to spend $384 billion through 2030 to refurbish and upgrade the drinking water system.

It is evident from past records that American Water continues to improve its water systems to abide by the government’s water utility rules. The company’s unit, Iowa American Water, recently completed numerous water main projects in the Iowa Quad Cities, with a total investment of about $1.25 million.

During the first nine months of 2013, American Water invested $665.3 million under its capital expenditure program. The company plans to invest approximately $285 million in the last three months of 2013.

These initiatives will enable American Water to provide uninterrupted water supply to its customers, improve consumer safety and maintain the government’s utility standards.

American Water currently has a Zacks Rank #3 (Hold). However, other water utilities that are currently performing well include Middlesex Water Co. (MSEX), with a Zacks Rank #1 (Strong Buy), and Connecticut Water Service Inc. (CTWS) and California Water Service Group (CWT), each with a Zacks Rank #2 (Buy).

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