Consolidated Water (CWCO) Buys Residual PERC Water for $7.8M
Consolidated Water Co. CWCO announced that it has exercised its right to acquire the remaining 39% of equity ownership of PERC Water Corporation (PERC) for nearly $7.8 million. This consideration consists of $2.44 million in cash and 368,383 shares of common stock valued at around $5.36 million.
Will Taking Full Control of PERC Help?
Consolidated Water acquired controlling interest of PERC in fourth-quarter 2019 and has since strengthened PERC’s capabilities and resources, resulting in strong financial performance, exceeding expectations.
PERC’s strong operating performance, revenue growth and profitability, as well as its synergies with other areas of CWCO’s business and future growth prospects, are going to boost CWCO’s performance. So given the past performance and present prospects of PERC, it is quite evident that acquiring the remaining 39% of PERC will improve CWCO’s performance.
In October 2022, PERC was awarded an expanded 10-year, $49.2 million contract to operate and maintain two advanced water treatment facilities in Southern California, which will surely boost earnings of CWCO.
Acquisition is Helping Water Industry
According to the Environmental Protection Agency, more than 50,000 community water systems and 16,000 community wastewater systems in the United States are currently providing water solutions to customers.
The acquisition of small units by larger utilities ensures necessary investments for the upgrade of infrastructure and the continuation of high-quality services to customers. American Water Works continues to widen its market footprint through strategic acquisitions.
Other water utilities like American Water Works AWK, SJW Group SJW and Essential Utilities WTRG in the water utility space are expanding operations through systematic acquisitions.
American Water Works has been making strategic acquisitions to expand its operations. As of Sep 30, 2022, through 15 closed acquisitions, the company added 65,300 customers to its existing customer base. AWK’s pending acquisitions (as of Sep 30, 2022), when completed, will add another 21,600 customers to the customer base.
The Zacks Consensus Estimate for American Water Works' 2022 and 2023 earnings suggests year-over-year growth of 4.9% and 7.1%, respectively. The current dividend yield of the company is 1.66%.
SJW Group completed more than 25 acquisitions in the 2010-2021 time frame and expanded operations. In January 2022, it closed the acquisition of Texas Country Water in Comal, TX. The deal added more than 1,900 water and wastewater customers to the existing customer base. This has been the fourth Texas acquisition by SJW Group in the past 12 months. In the next five years, the company plans to invest $1.5 billion to further strengthen its infrastructure.
The Zacks Consensus Estimate for SJW Group's 2022 and 2023 earnings implies year-over-year growth of 15.3% and 6.6%, respectively. The current dividend yield of the company is 1.8%.
In the six years ended Dec 31, 2021, Essential Utilities expanded utility operations by completing many water and wastewater acquisitions, which, in turn, added 94,000 customers. In the first nine months of 2022, WTRG completed two acquisitions, which added 19,175 customers. Essential Utilities plans to invest $3 billion from 2022 through 2024 to fortify operations and efficiently serve the expanding customer base.
Essential Utilities’ long-term earnings growth is pegged at 6.2%. The current dividend yield of the company is 2.4%. The Zacks Consensus Estimate for WTRG's 2022 and 2023 earnings implies year-over-year growth of 6.6% and 6.5%, respectively.
Price Performance
Shares of CWCO have gained 42.7% in the past year compared with the industry’s 0.0% return.
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Zacks Rank
Consolidated Water currently has a Zacks Rank #3 (Hold). 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
Consolidated Water Co. Ltd. (CWCO) : Free Stock Analysis Report
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Essential Utilities Inc. (WTRG) : Free Stock Analysis Report
