American Water Works Company AWK announced that its subsidiary, New Jersey American Water, will invest in excess of $3.5 million to replace the old water mains installed in Asbury Park, Neptune Township and Ocean Township service areas in Monmouth County. Notably, these installations are nearly 100 years old.
The company aims to replace 23,000 feet of old water mains with ductile iron pipes. The replacement of the old pipelines is expected to be completed by fall of 2017.
Maintenance Work Continues
American Water Works, along with its subsidiaries, continues to strengthen the existing infrastructure by replacing old and damaged pipelines. Last December, New Jersey American Water announced that it will install nearly $2.7 million of new water mains throughout Burlington and Camden Counties. (Read more:American Water Unit to Invest $2.7M in Pipeline Replacement)
For 2017, American Water Works’ capital investment budget is $1.5 billion. The company aims to invest $6.7–$7.3 billion from 2017 through 2021.
Need for Investment in Water Space
The overall water infrastructure in U.S. is quite old and quickly nearing towards the end of its effective life. Some of the water mains are near a century old and require immediate replacement. So, all the big operators in this fragmented water utility space are investing on a regular basis to upgrade and improve the quality of their existing infrastructure.
Other water utilities like Aqua America Inc. WTR has plans to make capital investments of over $450 million in 2017 as part of an ambitious investment target of over $1.2 billion in the 2017-2019 period. While Connecticut Water Service Inc. CTWS aims to invest more than $150 million in the 2017-2019 time frame to strengthen its existing water infrastructure.
Price Movement
In the last one month, American Water Works’ shares have returned 6.86%, outperforming the Zacks categorized Utility-Water Supply industry’s increase of 4.21% in the same time frame.
This water utility is well poised to benefit from regulated investments to strengthen existing infrastructure and strategic acquisition, which in turn is expanding customer base and providing a boost to the top line.
Zacks Rank
American Water Works currently carries a Zacks Rank #2 (Buy). Another favorably placed stock in the same space is Artesian Resources Corporation ARTNA, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Artesian Resources Corporation’s 2017 Zacks Consensus Estimate moved up by 4.1% to $1.46 per share in the last 30 days.
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