American Water Works Company
AWK
announced that its subsidiary, Illinois American Water has closed the acquisition of City of Jerseyville water and wastewater systems. This acquisition will add 4,100 water and 3,950 wastewater customers to the company’s existing customer base in Illinois. American Water’s unit has acquired the water and wastewater systems for $43.25 million.
Illinois American Water currently provides reliable water and wastewater services to more than 1.3 million residents in Illinois. Through this acquisition, American Water Works’ unit will extend high-quality services to new customers.
Aging Water Infrastructure
Billions of gallons of potable water are lost in the United States every year due to thousands of pipeline breaks across the country on a daily basis, with the primary reason being delay in replacing old and soiled water as well as wastewater pipelines. Wastewater pipeline breaks also increase the possibility of potable water contamination.
The acquisition of City of Jerseyville water and wastewater systems will ensure fresh investment to upgrade the aging systems. Illinois American Water plans to invest $15 million in the first five years of ownership to upgrade City of Jerseyville water and wastewater systems.
Consolidation Brings Investment in Water Space
The role of consolidation is extremely vital in the water utility space, as it is extremely difficult for small service providers to invest a large sum to upgrade and repair old water mains. As it is, 50,000 water and 15,000 wastewater operators are currently providing services in the United States. Some of these operators are not large enough to accommodate the infrastructure upgrade expenses.
Hence, large water utilities are actively acquiring small water and wastewater service units, as well as ensuring investments to upgrade the quality of services. American Water Works is quite active in acquiring small service providers. As of Jul 31, 2020, the company completed 13 acquisitions in six states, which added 10,800 customers to the existing customer base. The remaining 28 acquisitions as of Jul 31, 2020, when completed, will add more than 43,600 customers to its existing customer base. American Water Works has been investing regularly to strengthen water and wastewater infrastructure. 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.
Other water utilities like California Water Service Group
CWT
and Global Water Resources, Inc.
GWRS
are also taking the inorganic route to expand operations in the United States, as well as making investments to upgrade infrastructure. Another water utility, Essential Utilities
WTRG
not only expanded water and wastewater operations through acquisitions but also ventured into the natural gas distribution business through the acquisition of Peoples.
Price Performance
Shares of American Water have outperformed the
industry
in the past 12 months.
Zacks Rank
Currently, the company has a Zacks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report