On May 23, 2014, the shares of
American Water Works Company, Inc.
) touched a 52-week high of $47.69. The share price was finally
closed at $47.61, up 0.7% from the previous day's closing. We
believe that the company's steady investment in acquisition
activities, infrastructure upgrade, strong cash generation capacity
and payment of regular dividends have boosted the share price.
American Water Works continues to follow a systemic acquisition
program. In the first three months of 2014, the company spent
around $0.19 billion as capital expenditure. During first-quarter
2014, the company completed acquisitions of regulated water system
and regulated water and wastewater facilities. On May 21, 2014,
American Water Works' unit Kentucky American Water has inked an
agreement to acquire the water and wastewater assets of the City of
Millersburg, KY. The company plans to allocate $0.7 billion in the
coming five years for acquisitions and strategic initiatives.
Apart from American Water Works, many of its peers like
Consolidated Water Co. Ltd.
Connecticut Water Service Inc.
) previously pursued inorganic initiatives to expand their scale of
In addition to pursuing steady acquisitions program, American Water
Works is also investing substantially to upgrade its systems.
Within the next five years, the company intends to spend a total of
around $5.1 billion at its regulated operations, primarily to
improve infrastructure. These initiatives will enable American
Water Works to provide reliable services to its customers.
American Water Works continues to maintain a stable liquidity
position. As of Mar 31, 2014, the company had cash balance of $30.8
million and available fund of around $1,209 million under the
credit facility. In addition, the company had a strong cash
generation capacity. In the first quarter, cash flow from operating
activities jumped 63.7% to $244.9 million from $149.6 million in
the year-ago comparable period. A favorable financial position
enables American Water Works to pursue a steady expansion program.
American Water Works maintains a stable dividend payment history.
In Apr 2014, the board of directors announced that the company will
pay a quarterly dividend of 31 cents, up 10.7% from the previous
payout. These initiatives will enable American Water Works retain
investors' attention on the stock.
American Water Works currently has a Zacks Rank #2 (Buy). Another
stock in the industry looking equally good is
Aqua America Inc.
), carrying a Zacks Rank #2 (Buy).
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