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American Water Arms Seeks Nod for Infrastructure Replacement

Zacks

American Water Works Company AWK announced that its unit West Virginia American Water has filed an application with the Public Service Commission (PSC) of West Virginia, seeking approval for $50.6 million investment in the 2021 infrastructure replacement program. Timely upgrade and maintenance of water and wastewater pipelines increase the reliability of services provided to customers.

West Virginia American Water’s 2021 infrastructure replacement plan includes $18.0 million to replace or upgrade more than 30 miles of water mains; $4.3 million to restore service lines and fire hydrants; $5.6 million to replace water meters; $2.2 million for booster stations, $8.3 million for post-acquisition investment in troubled water systems; along with $12.2 million for water treatment improvements.

Aging Water Infrastructure

The U.S. water and wastewater infrastructure is aging, and a major portion of it is nearing the end of effective life. Per a finding from American Society of Civil Engineers, there are 240,000 water main breaks per year in the United States, resulting in the wastage of more than 2 trillion gallons of treated drinking water.

So, it is quite essential to make repairs and upgrade the old and soiled water and wastewater mains to prevent wastage, as well as lower the possibility of potable water contamination. American Water Works is quite active in making regular investments in its service territories and maintaining the water mains. American Water Works has plans to invest $8.8-$9.4 billion in the 2020-2024 time period and $20-$22 billion in the next decade. These investments will allow it to maintain and expand its existing water infrastructure and provide reliable water services to the expanding customer base.

In addition to American Water, Essential Utilities WTRG is also making regular investments in water and wastewater systems. Its long-term plan is to invest $2.8 billion in the 2020-2022 time period to rehabilitate, and strengthen the existing water and natural gas pipeline systems.

Price Performance

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



Zacks Rank and Key Picks

Currently, the company has a Zacks Rank #3 (Hold). A couple of better-ranked water utilities include American States Water Company AWR and Middlesex Water Company MSEX, each presently holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

American States Water delivered average positive earnings surprise of 5.9% in the last four quarters. The Zacks Consensus Estimate for 2020 earnings has moved up 1.8% in the past 90 days.

Middlesex Water Company delivered average positive earnings surprise of 2.19% in the last four quarters. The Zacks Consensus Estimate for 2020 earnings has moved up 2.5% in the past 90 days.

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