Global Water Resources, Inc
.
GWRS
announced that it has signed an agreement to acquire Las Quintas Serenas Water Company, located near Tucson in Pima County, AZ. This acquisition will enhance the company’s service area by 2.5 square miles and add new 1,100 water service connections to the existing customer base.
The Las Quintas Serenas Water acquisition is expected to close next month, subject to regulatory approval. The close proximity of the acquired assets to its existing operations in the region will allow the company to extend high-quality water services to new customers.
Global Water Resources has plans to make the necessary investments in the acquired Las Quintas Serenas Water Company assets. The company is going to convert read meters to smart meters. Global Water Resources has been expanding its footprint in the Pima County through acquisitions. The acquisition of Las Quintas Serenas will be its sixth acquisition in Pima County.
Fragmented Water Industry
Per the U.S. Environmental Protection Agency reports, more than 53,000 community water systems and 16,000 wastewater systems in the United States are providing water solutions to customers. This highly fragmented industry creates operational challenges, as a major portion of the existing water infrastructure in the United States is approaching the end of effective service life. At times, it becomes quite difficult for small service providers to make investments to upgrade the infrastructure.
Consolidation Can Lead to Investment in Water Space
Consolidation can provide a solution to this fragmented and aging water and wastewater infrastructure of the United States. Large water utilities with deep pockets can make the necessary investments, and provide high-quality water and wastewater services to customers. A substantial portion of potable water is wasted every day in the United States due to pipeline breaks. Timely repairs and investments can stop this wastage.
American Water Works
AWK
is quite active in making acquisitions to expand operations and make the necessary investments to upgrade the acquired property. American Water Works has plans to invest $10.4 billion in the 2021-2025 time period and $22-$25 billion in the next decade. From the start of the year till Aug 1, the company expanded the customer base by 11,200 through organic means and acquisitions. On Sep 22, American Water Works’ California unit acquired the privately-held East Pasadena Water Company. California American Water, through this acquisition, will be providing water services to 3,000 homes and businesses in the region.
Likewise, another water utility,
Essential Utilities
WTRG
has not only expanded water and wastewater operations through acquisitions but also ventured into the natural gas distribution business through the acquisition of Peoples. It completed the acquisition of the wastewater system of the Village of Bourbonnais on Sep 14, 2021, which added 6,500 customers. The company plans to invest $3 billion through 2023 to fortify water and natural gas operations as well as efficiently serve the expanding customer base.
California Water Service
CWT
has decided to invest in the range of $270-$300 million in 2021 and expand operations through strategic acquisitions. In August, the company received regulatory approval to acquire the water and wastewater systems serving the Preserve at Millerton.
Price Performance
Shares of Global Water Resources have outperformed the
industry
in the past three months.
Image Source: Zacks Investment Research
Zacks Rank
The company currently has a Zacks Rank #4 (Sell).
You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
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