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AWK's Shares Gain as Unit Secures Approval for New Rates
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American Water Works Company, Inc.’s (AWK - Free Report) unit, New Jersey American Water, has been granted new water and wastewater rates by the New Jersey Board of Public Utilities, effective from Sep. 15, 2024. This rate hike is likely to increase the company’s annual revenues by approximately $79.5 million.
The company's request was filed in January 2024 as it wanted to recover infrastructure investment costs of more than $1.3 billion. This includes upgrades in the treatment system and distribution networks.
Rate Hike - A Dire Need for AWK
The existing water supply system and infrastructure of American Water Works are getting old. It needs to invest regularly to continue upgrading and maintaining its infrastructure to ensure long-term growth. Water rate hikes at regular intervals will help AWK continue its strategic investments to support the evolving needs of both the business and its customers.
Additionally, the company has also proposed the introduction of the Universal Affordability Tariff, which aims to support income-eligible customers by offering discounts on both fixed service and monthly usage charges. This tariff will be integrated into its existing H2O Help to Others program, thus further emphasizing its focus on affordability for customers.
Investment Required in Water Space
Per the U.S. Environmental Protection Agency, investments of $625 billion and $271 billion are necessary to maintain and expand drinking water and wastewater pipelines, respectively, to meet demand in the next 20 years. Water infrastructure, including water mains, storage tanks and purifying units, needs maintenance at proper intervals.
American Water Works aims to invest $3.1 billion in 2024, with a major portion to be utilized for infrastructure improvements in regulated businesses. It aims to invest in the range of $16-$17 billion in the 2024-2028 period and $34-$38 billion in the 2024-2033 period.
Other water utilities like SJW Group (SJW - Free Report) , American States Water Company (AWR - Free Report) and California Water Service Group (CWT - Free Report) also have strategic capital investment plans to strengthen infrastructure.
SJW has invested $158 million in the first half of 2024, which is approximately 48% of the $332 million investment budgeted for 2024. It aims to invest nearly $1.6 billion during the 2024-2028 period to build and maintain its water and wastewater operations.
SJW delivered an average earnings surprise of 9.3% in the last four quarters. The Zacks Consensus Estimate for 2024 earnings per share has increased 0.4% in the past 30 days to $2.76.
AWR's strategic capital investments are making its infrastructure stronger and more resilient. It invested $175.7 million in company-funded capital projects in 2023 and aims to invest $573.1 million during the 2025-2027 period.
AWR delivered an average earnings surprise of 3.4% in the last four quarters. The consensus estimate for 2024 earnings indicates year-over-year growth of 6.3%.
CWT invested $383.7 million in capital improvements in 2023 and $214.4 million in the first half of 2024. It aims to invest $380 million in 2024.
CWT delivered an average earnings surprise of 125.4% in the last four quarters. The Zacks Consensus Estimate for 2024 earnings indicates year-over-year growth of 265.9%.
AWK Stock’s Price Performance
Shares of AWK have gained 10.9% in the past three months compared with the industry’s 9.4% growth.
Image: Bigstock
AWK's Shares Gain as Unit Secures Approval for New Rates
American Water Works Company, Inc.’s (AWK - Free Report) unit, New Jersey American Water, has been granted new water and wastewater rates by the New Jersey Board of Public Utilities, effective from Sep. 15, 2024. This rate hike is likely to increase the company’s annual revenues by approximately $79.5 million.
The company's request was filed in January 2024 as it wanted to recover infrastructure investment costs of more than $1.3 billion. This includes upgrades in the treatment system and distribution networks.
Rate Hike - A Dire Need for AWK
The existing water supply system and infrastructure of American Water Works are getting old. It needs to invest regularly to continue upgrading and maintaining its infrastructure to ensure long-term growth. Water rate hikes at regular intervals will help AWK continue its strategic investments to support the evolving needs of both the business and its customers.
Additionally, the company has also proposed the introduction of the Universal Affordability Tariff, which aims to support income-eligible customers by offering discounts on both fixed service and monthly usage charges. This tariff will be integrated into its existing H2O Help to Others program, thus further emphasizing its focus on affordability for customers.
Investment Required in Water Space
Per the U.S. Environmental Protection Agency, investments of $625 billion and $271 billion are necessary to maintain and expand drinking water and wastewater pipelines, respectively, to meet demand in the next 20 years. Water infrastructure, including water mains, storage tanks and purifying units, needs maintenance at proper intervals.
American Water Works aims to invest $3.1 billion in 2024, with a major portion to be utilized for infrastructure improvements in regulated businesses. It aims to invest in the range of $16-$17 billion in the 2024-2028 period and $34-$38 billion in the 2024-2033 period.
Other water utilities like SJW Group (SJW - Free Report) , American States Water Company (AWR - Free Report) and California Water Service Group (CWT - Free Report) also have strategic capital investment plans to strengthen infrastructure.
SJW has invested $158 million in the first half of 2024, which is approximately 48% of the $332 million investment budgeted for 2024. It aims to invest nearly $1.6 billion during the 2024-2028 period to build and maintain its water and wastewater operations.
SJW delivered an average earnings surprise of 9.3% in the last four quarters. The Zacks Consensus Estimate for 2024 earnings per share has increased 0.4% in the past 30 days to $2.76.
AWR's strategic capital investments are making its infrastructure stronger and more resilient. It invested $175.7 million in company-funded capital projects in 2023 and aims to invest $573.1 million during the 2025-2027 period.
AWR delivered an average earnings surprise of 3.4% in the last four quarters. The consensus estimate for 2024 earnings indicates year-over-year growth of 6.3%.
CWT invested $383.7 million in capital improvements in 2023 and $214.4 million in the first half of 2024. It aims to invest $380 million in 2024.
CWT delivered an average earnings surprise of 125.4% in the last four quarters. The Zacks Consensus Estimate for 2024 earnings indicates year-over-year growth of 265.9%.
AWK Stock’s Price Performance
Shares of AWK have gained 10.9% in the past three months compared with the industry’s 9.4% growth.
Image Source: Zacks Investment Research
AWK’s Zacks Rank
AWK currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.