Water and wastewater service provider Aqua America Inc. WTR hit a new 52-week high of $33.00 during yesterday’s trading session before closing a tad lower at $32.99. The stock has delivered a one-year return of about 26.5% while the S&P 500 declined 0.3% over the same time period.
Over the past 52 weeks, Aqua America’s share price has ranged from a low of $24.40 to a high of $33.00. Average volume of shares traded over the last three months is approximately 0.74 million.
Why is Aqua America Moving Up?
Aqua America’s shares have been on the rise following its first-quarter 2016 results declared on May 3. The company posted first-quarter earnings of 29 cents per share, surpassing the Zacks Consensus Estimate by a penny and the year-ago figure by 7.4%. The long-term earnings growth of the company is presently at 6.37%.
Massive infrastructural investments are required to upgrade and maintain the water utilities, as old and soiled water pipelines are quickly nearing their effective service life. The water utilities have immense opportunity to expand their regulated operations. Aqua America aims to invest more than $350 million in capital investments in 2016 and in excess of $1.1 billion in 2016 through 2018. The company expects its rate base to grow by 6% to 7% in 2016.
Consolidation is the need of the hour in the fragmented U.S. water utility space. In 2015, the company added 17,747 customers, primarily on the back of utility system acquisition and organic growth. Year to date (May 3, 2016), the company completed several acquisitions in its service territories, adding 5,250 customers to its existing customer base. An expanding customer base will undoubtedly increase the demand for water and wastewater services.
Aqua America has an extensive network of water treatment, pumping and distribution facilities and sources of water supply, helping it to serve its customers efficiently during normal conditions. Infrastructural additions will allow it to provide quality service to its expanding customer base.
Aqua America currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the water utility space are Companhia de Saneamento Basico do Estado de Sao Paulo SBS, Artesian Resources Corp. ARTNA and Consolidated Water Co. Ltd. CWCO, all carrying a Zacks Rank #2 (Buy).
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