UK markets close in 4 hours 51 minutes
  • FTSE 100

    7,198.57
    +29.29 (+0.41%)
     
  • FTSE 250

    18,724.02
    +57.24 (+0.31%)
     
  • AIM

    876.18
    -0.04 (-0.00%)
     
  • GBP/EUR

    1.1543
    -0.0068 (-0.59%)
     
  • GBP/USD

    1.2077
    -0.0099 (-0.81%)
     
  • BTC-GBP

    16,070.40
    +193.19 (+1.22%)
     
  • CMC Crypto 200

    417.94
    -13.53 (-3.13%)
     
  • S&P 500

    3,785.38
    -33.45 (-0.88%)
     
  • DOW

    30,775.43
    -253.88 (-0.82%)
     
  • CRUDE OIL

    107.46
    +1.70 (+1.61%)
     
  • GOLD FUTURES

    1,791.60
    -15.70 (-0.87%)
     
  • NIKKEI 225

    25,935.62
    -457.42 (-1.73%)
     
  • HANG SENG

    21,859.79
    -137.10 (-0.62%)
     
  • DAX

    12,841.76
    +57.99 (+0.45%)
     
  • CAC 40

    5,953.09
    +30.23 (+0.51%)
     

American Water's (AWK) Pennsylvania Arm Invests in Sewer Mains

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·3-min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

American Water Works AWK recently announced that its unit, Pennsylvania American Water, has started working on a project to replace more than 4,000 feet of sewer pipe and provide lining for more than 19,000 feet of additional pipe. The company will invest $6.7 million to upgrade sewer pipes in Dunmore and Scranton PA.

It is quite essential to upgrade and replace the aging infrastructure to provide quality services to customers. This project will replace pipeline which has been in service for nearly a century and almost completed its effective service life.

Pennsylvania American Water has been very active in upgrading and maintaining its water and wastewater infrastructure. Pennsylvania American Water invested nearly $373 million in 2021 alone to improve its water and wastewater treatment and pipeline systems.

Aging Infrastructure Needs Investment

The aging sewer pipeline results in pipeline breaks, creating the possibility of contamination and wastage of valuable potable water.
 
Per the U.S. Environmental Protection Agency, investment of $473 billion and $271 billion, respectively,  is necessary to maintain and expand drinking water pipelines and for wastewater pipelines to meet demand over the next 20 years. To avoid sewer main breaks it is quite essential to make systematic investments for the repair and maintenance of the old infrastructure.

Regular Investment from Utilities

A huge investment is required to upgrade the quality of water and wastewater infrastructure. The  water utilities are making systematic investments to replace and upgrade the same.

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 1.9%. 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 6.1%. The current dividend yield of Essential Utilities is nearly 2.4%.

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 declined 14.2% in the past six months compared with the industry’s 6.8% decline.

 

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Zacks Rank

American Water currently has a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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
 
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
 
To read this article on Zacks.com click here.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting