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American Water's (AWK) Unit Improves Sewer Lines in Missouri

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American Water Works Company (AWK - Free Report) announced that its subsidiary, Missouri American Water, has invested in upgrading one sewer project and is planning to start another project in Arnold, MO, at a combined cost of $2.7 million. These projects to improve the conditions of wastewater lines are part of the company’s commitment to invest $5 million in Arnold in the first four years after taking ownership in 2015.

Missouri American Water is currently in the final stages of a project to line nearly 7,000 feet of sewer lines in the city with what is known as Cured in Place Pipe (CIPP). The lining strengthens existing lines and shores up any leaks.

Upgrading and replacing the aging infrastructure is an ongoing work for this water utility. Missouri American Water annually invests more than $200 million statewide in infrastructure improvements, including projects such as this.

Other Projects in the region

After completing the lining of Cured in Place Pipe, the company will soon begin upsizing and relocating portions of sewer lines in Arnold. This project is in the design phase, with construction from the same tentatively scheduled to begin in March 2019. The objective of this new sewer project is to reduce the number of sewer backups in the city by allowing waste to flow more easily.

Large Water Utilities are Investing Funds

The U.S. water infrastructure is quite old, and massive investment is required to fix the existing water as well as wastewater systems. Some of the water mains are nearly a century old and require immediate replacement. Facelift of old transmission mains and the betterment of treatment plants, in order to enhance the water infrastructure, require a hefty sum of money. Large water utilities undertake solid long-term capital investment plans to upgrade the existing assets and also fortify the same that are added to their respective portfolio via acquisitions.

In the first nine months of 2018, the company made capital investments of $1.5 billion. American Water aims at pumping $8.4-$9 billion into the mending activity from 2018 through 2022, which will help drive the company’s earnings by 7-10% in the said period from a 2016 base.

Another water utility, Aqua America , intends to make capital investments in excess of $500 million in the ongoing year, which is integral for achieving an ambitious investment target of more than $1.4 billion in the 2018-2020 time frame.

Price Movement

In the past six months, shares of American Water have gained 12.2% compared with the industry’s growth of 7.7%.



Zacks Rank & Other Key Picks

Currently, American Water has a Zacks Rank #2 (Buy). Other top-ranked stocks from the same industry include American States Water Company (AWR - Free Report) and Consolidated Water Co Ltd. (CWCO - Free Report) , each sharing the same rank of 2 with American Water. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

American States Water surpassed third-quarter earnings estimates by 3.33%. The consensus estimate for 2018 bottom line has moved 0.6% north to $1.73 per share over the past 30 days.

Consolidated Water outpaced third-quarter earnings estimates by 6.67%. The consensus estimate for 2018 bottom line has moved 29.8% north to 74 cents per share over the past 30 days.

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