Water utility American Water Works Company Inc. AWK further expanded its operations by acquiring Hickory Hills water and sewer systems, through its unit Missouri American Water. This new acquisition will add 48 new customers to Missouri American Water’s customer base.
The addition of 48 new customers might sound quite insignificant when compared with Missouri American Water’s existing customer base of nearly 1.5 million. However, the company did not build its customer base in a single day. Acquisitions and the quality of services provided by Missouri American Water helped the water utility to gradually expand its base.
The U.S. water utility space is highly fragmented as there are a number of water utilities operating on various scales ranging from some hundreds of customers to a million. The fragmented water industry has raised concerns about whether the smaller systems are sustainable in terms of competence and adaptability.
Apart from American Water Works , other operators in the water utility space like Aqua America Inc. WTR, American States Water Company AWR and California Water Service Group CWT are either opting for the inorganic route or investing funds to strengthen their existing water and waste water treatment infrastructure.
Consolidation allows the larger operators with financial strength and the ability to upgrade the systems of the smaller service providers to render quality water services across all customer classes. Missouri American Water is beginning the improvement work by replacing water meters in the Hickory Hills system from this week.
American Water Works Company currently has a Zacks Rank #2 (Buy).
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