We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
American Water's (AWK) New Jersey Arm Buys Assets of Salem City
Read MoreHide Full Article
American Water Works (AWK - Free Report) announced that its subsidiary, New Jersey American Water, completed its acquisition of the water and wastewater systems of the City of Salem, N.J., for $18 million.
On May 22, 2024, the New Jersey Board of Public Utilities approved the municipal consent allowing New Jersey American Water to provide services to Salem City customers following the closing of the transaction. These former municipally owned systems serve more than 2,300 water and 2,300 wastewater customers.
Per the agreement, New Jersey American Water will spend more than $50 million on upgrades during the first 10 years of the arrangement. These expenditures cover a comprehensive capital improvement plan that includes PFNA treatment deployment, important system improvements, and maintenance of the City's aging water and wastewater infrastructure.
Need for Investments & Consolidation
Aging water and wastewater infrastructure, and delays in essential upgrades are concerns for the industry. Per the American Society of Civil Engineers, nearly 50,000 community water systems and 16,000 wastewater treatment systems in the United States are presently providing water solutions to customers. Some of the service providers are too small and have limited financial strength to carry out essential and costly repairs on time, leading to pipeline breakage, disruption of services and increased possibility of contamination.
In order to ensure the extension of high-quality services to customers and investments needed to upgrade the existing and acquired assets, large water utility companies are acquiring small players. Per the U.S. Environmental Protection Agency estimates, drinking water and wastewater systems will require at least $896 billion in additional investment over the next 20 years.
In the previous six years, New Jersey American Water has made six acquisitions. With the completion of the acquisition of Egg Harbor City's water and wastewater system in June 2023, New Jersey American Water gained more than 1,500 new water and 1,500 new wastewater customers under the State's Water Infrastructure Protection Act.
AWK has pending 26 acquisitions (as of Mar 31, 2024), which, when completed, should add another 66,800 customers to its customer base. Acquisitions allow the company to get fresh demand for its services and expand its revenue stream.
American Water aims to invest $3.1 billion in 2024. A major portion of this amount would be utilized for infrastructure improvements in regulated businesses. It aims to invest $16-$17 billion during 2024-2028 and $34-$38 billion in the 2024-2033 period.
Peer Moves
Apart from AWK, other companies like California Water Service Group (CWT - Free Report) and Essential Utilities (WTRG - Free Report) are also expanding their operations through acquisitions and investments.
In May 2024, CWT’s subsidiary, California Water Service, acquired Kings Mountain Park Mutual Water Company’s water system assets. In January 2024, CWT’s subsidiaries, Hawaii Water Service and New Mexico Water Service, acquired the assets of HOH Utilities, LLC and Monterey Water Company, respectively. This added nearly 2,200 new customers.
In the first quarter of 2024, CWT made capital investments of $109.8 million, up 34% year over year, to enhance its infrastructure. The estimated capital expenditure for 2024 is $380 million. The company continues to acquire water and wastewater systems to expand its operations.
Essential Utilities is actively exploring opportunities to expand utility operations through the acquisition of municipal assets. Since 2015, it has been expanding utility operations by completing many water and wastewater acquisitions, adding 129,000 customers.
Essential Utilities plans to invest $1.3-$1.4 billion in 2024 for more than 5,000 planned projects and $7.2 billion during 2024-2028 to improve water and natural gas systems to better serve customers.
Price Performance
In the past three months, shares of AWK have risen 6.5% compared with the industry’s 2.5% growth.
PRMW’s long-term (three to five years) earnings growth rate is 15.47%. The Zacks Consensus Estimate for 2024 EPS implies a year-over-year improvement of 53.2%.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
American Water's (AWK) New Jersey Arm Buys Assets of Salem City
American Water Works (AWK - Free Report) announced that its subsidiary, New Jersey American Water, completed its acquisition of the water and wastewater systems of the City of Salem, N.J., for $18 million.
On May 22, 2024, the New Jersey Board of Public Utilities approved the municipal consent allowing New Jersey American Water to provide services to Salem City customers following the closing of the transaction. These former municipally owned systems serve more than 2,300 water and 2,300 wastewater customers.
Per the agreement, New Jersey American Water will spend more than $50 million on upgrades during the first 10 years of the arrangement. These expenditures cover a comprehensive capital improvement plan that includes PFNA treatment deployment, important system improvements, and maintenance of the City's aging water and wastewater infrastructure.
Need for Investments & Consolidation
Aging water and wastewater infrastructure, and delays in essential upgrades are concerns for the industry. Per the American Society of Civil Engineers, nearly 50,000 community water systems and 16,000 wastewater treatment systems in the United States are presently providing water solutions to customers. Some of the service providers are too small and have limited financial strength to carry out essential and costly repairs on time, leading to pipeline breakage, disruption of services and increased possibility of contamination.
In order to ensure the extension of high-quality services to customers and investments needed to upgrade the existing and acquired assets, large water utility companies are acquiring small players. Per the U.S. Environmental Protection Agency estimates, drinking water and wastewater systems will require at least $896 billion in additional investment over the next 20 years.
In the previous six years, New Jersey American Water has made six acquisitions. With the completion of the acquisition of Egg Harbor City's water and wastewater system in June 2023, New Jersey American Water gained more than 1,500 new water and 1,500 new wastewater customers under the State's Water Infrastructure Protection Act.
AWK has pending 26 acquisitions (as of Mar 31, 2024), which, when completed, should add another 66,800 customers to its customer base. Acquisitions allow the company to get fresh demand for its services and expand its revenue stream.
American Water aims to invest $3.1 billion in 2024. A major portion of this amount would be utilized for infrastructure improvements in regulated businesses. It aims to invest $16-$17 billion during 2024-2028 and $34-$38 billion in the 2024-2033 period.
Peer Moves
Apart from AWK, other companies like California Water Service Group (CWT - Free Report) and Essential Utilities (WTRG - Free Report) are also expanding their operations through acquisitions and investments.
In May 2024, CWT’s subsidiary, California Water Service, acquired Kings Mountain Park Mutual Water Company’s water system assets. In January 2024, CWT’s subsidiaries, Hawaii Water Service and New Mexico Water Service, acquired the assets of HOH Utilities, LLC and Monterey Water Company, respectively. This added nearly 2,200 new customers.
In the first quarter of 2024, CWT made capital investments of $109.8 million, up 34% year over year, to enhance its infrastructure. The estimated capital expenditure for 2024 is $380 million. The company continues to acquire water and wastewater systems to expand its operations.
Essential Utilities is actively exploring opportunities to expand utility operations through the acquisition of municipal assets. Since 2015, it has been expanding utility operations by completing many water and wastewater acquisitions, adding 129,000 customers.
Essential Utilities plans to invest $1.3-$1.4 billion in 2024 for more than 5,000 planned projects and $7.2 billion during 2024-2028 to improve water and natural gas systems to better serve customers.
Price Performance
In the past three months, shares of AWK have risen 6.5% compared with the industry’s 2.5% growth.
Image Source: Zacks Investment Research
Zacks Rank & Stock to Consider
AWK currently has a Zacks Rank #3 (Hold).
A better-ranked stock from the same industry is Primo Water (PRMW - Free Report) . The company presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
PRMW’s long-term (three to five years) earnings growth rate is 15.47%. The Zacks Consensus Estimate for 2024 EPS implies a year-over-year improvement of 53.2%.