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WTR Still on Expansion Mode

Zacks Equity Research

Aqua America Inc. (WTR) continues to follow a steady inorganic growth strategy to expand its existing operations. The company’s two subsidiaries - Aqua Illinois and Aqua Virginia - recently acquired four water systems and two wastewater systems.

Aqua Illinois invested approximately $0.6 million to acquire the Village of Sun River Terrace wastewater system, the water and wastewater systems of Woodlawn Utilities, the Sheridan Grove water system, the Nordic Woods water system. The company has been offering water services to customers in the region. Post acquisition, Aqua Illinois will directly provide water services to the Village of Sun River Terrace wastewater system’s customers.

In another transaction, Aqua Virginia acquired the water systems of the St. Tammany Landing Property Owners Association, Inc. for $0.03 million.

These acquisitions will enable Aqua America to increase its customer base besides experiencing operational synergy. In addition, the inclusion of wastewater systems of the Village of Sun River Terrace will help the company to reap benefits from its existing facilities in the region while reducing competition.

It is evident from past records that Aqua America is continuously acquiring new assets besides improving existing set ups. Year to date, the company has completed acquisitions of 15 water and wastewater systems, including the current transactions. On Nov 7, 2013, Aqua America’s subsidiary Aqua Virginia acquired the Blacksburg Country Club wastewater system and treatment plant with a deal value of $0.14 million.

Apart from Aqua America, another water utility provider American Water Works Company, Inc. (AWK) is also following the same strategy. American Water’s unit Virginia American Water acquired Dale Service Corporation for $27.7 million.

We appreciate Aqua America’s continuous effort towards strategic acquisitions and upgrading the existing infrastructure. During the first nine months of 2013, the company invested $216.1 million, under its capital investment program, to upgrade the existing infrastructure distribution networks and replace older pipes, mainly in Pennsylvania.

These initiatives will enable Aqua America to provide uninterrupted water to its customers while strengthening system competence and improving reliability as well as public safety.

Aqua America currently has a Zacks Rank # 3 (Hold). Other water utilities that are worth considering include Middlesex Water Co. (MSEX) with a Zacks Rank #1 (Strong Buy), and Connecticut Water Service, Inc. (CTWS) with a Zacks Rank #2 (Buy).

Read the Full Research Report on CTWS
Read the Full Research Report on MSEX
Read the Full Research Report on WTR
Read the Full Research Report on AWK

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