Yahoo Finance American Water (AWK) Gets Navy Contract Worth $341 Million
American Water Works AWK recently announced that its unit, Military Services Group, has received a long-term contract worth $341 million for the ownership, operation, maintenance and replacement of the wastewater utility system assets at Naval Station Mayport ("NS Mayport") in Jacksonville, FL. The contract is for 50 years and will be subject to an annual economic price adjustment.
Military Services Group’s existing knowledge and expertise to provide quality water and wastewater services to 17 military installations in the United States, enabled it to win its first long-term service contract from the Naval department. Currently, Military Services Group is providing services to 12 Army installations and Five Air Force installations.
Military Services Group is currently pursuing two more defense deals and there is a possibility of contract upgrades on existing bases. If American Water Works’ unit succeeds in winning more military deals, the contribution from this unit will improve from the present levels.
Utilities Focused on Upgrading Infrastructure
Apart from military contracts, a significant portion of utilities’ earnings comes from civilian deals. The overall water and wastewater infrastructure of the United States is aging and utilities are making systematic investments to replace and upgrade the aging water infrastructure.
American Water plans to invest around $13-$14 billion during 2022-2026 and around $28-$32 billion between 2022 and 2031 to upgrade as well as strengthen the existing water and wastewater infrastructure. Water utilities like California Water Service Group CWT, Essential Utilities WTRG and Middlesex Water MSEX have well-chalked-out capital investment plans to strengthen their infrastructure.
California Water Service has more than $1 billion capital expenditure planned for the 2022-2024 time period. The current dividend yield of California Water Service is nearly 1.8%. The Zacks Consensus Estimate for CWT’s 2023 earnings indicates year-over-year growth of 9.3%.
Essential Utilities aims to invest $3 billion through 2024 to strengthen water and natural gas operations. The Zacks Consensus Estimate for WTRG’s 2022 earnings indicates year-over-year growth of 6.6%. The long-term (three to five years) earnings growth of WTRG is currently pegged at 6.2%. The current dividend yield of Essential Utilities is nearly 2.3%.
Middlesex Water plans to invest $229 million during 2022-2024 to strengthen its water and wastewater infrastructure for providing services to customers in a safe, reliable and efficient manner. The Zacks Consensus Estimate for MSEX’s 2022 and 2023 earnings indicates year-over-year growth of 28% and 7.6%, respectively. MSEX reported an average surprise of 2.02% in the last four quarters.
Price Performance
Shares of AWK have lost 7.7% in the past three months compared with the industry’s 9.7% decline.
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Zacks Rank
American Water currently has a Zacks Rank #2 (Buy). 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
California Water Service Group (CWT) : Free Stock Analysis Report
Middlesex Water Company (MSEX) : Free Stock Analysis Report
Essential Utilities Inc. (WTRG) : Free Stock Analysis Report
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