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California Water Acquires Greenwood Estates Water System

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California Water Service Group’s (CWT - Free Report) subsidiary — Washington Water Service (Washington Water) — closed the acquisition of the Greenwood Estates water system on Mar 31. Washington Water will now have the ownership of the 25 connections, previously belonging to Greenwood Estates system.

California Water also announced that its another subsidiary — New Mexico Water Service (New Mexico Water) — entered into a purchase agreement with Valencia Mesa Water Company. When approved by the New Mexico Public Regulation Commission, New Mexico Water will serve additional 80 residential customers that belong to Valencia Mesa Water.

Importance of Acquisition

Acquisition is an important element of the company’s growth strategy. Recently, California Water received nod from the Washington Utilities and Transportation Commission to acquire the Rainier View Water Company’s water system assets.

Consolidation is very important for the fragmented Utility - Water Supply industry. At present, more than 53,000 water systems in the United States are providing water solutions to customers. To continue the flow of uninterrupted water service 24X7, small water suppliers need to make regular investments, which is difficult for them. Thus, big water suppliers acquire smaller ones and provide quality water as well as wastewater services to its new customers at reasonable prices. In addition, big water utilities with deep pockets make necessary investments to repair, upgrade and expand water infrastructure to stop wastage of water and increase resilience of services.   

Other companies from the industry, that also make acquisitions on a continuous basis to expand operations are American Water Works Company (AWK - Free Report) , Middlesex Water Company (MSEX - Free Report) and Global Water Resources (GWRS - Free Report) .

Moreover, the current crisis created due to the coronavirus pandemic has made us appreciate the value of water. Maintaining hygiene through washing hands with soap at regular intervals can save people from getting infected and assist in breaking the spread of this contagious virus.  

Price Movement

California Water Service’s shares have dropped 12.6% in the past 12 months compared with 14.9% decline of the industry.



Zacks Rank

Currently, California Water Service has a Zacks Rank #4 (Sell).

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

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