American Water Works Company Inc.
) received a contract worth $288 million from the U.S. Department
of Defense. Per the contract, the company will maintain and
operate the water and wastewater systems at Hill Air Force Base,
Utah for the next 50 years. The deal comes with an annual price
adjustment clause allowing the company to adjust for price
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American Water Works Military Services Group will be entrusted to
carry out this work for the next five decades. This deal marks a
sunny start for this water utility and speaks of the quality of
services offered by American Water Works.
American Water Works' expertise and long-standing working
relationship with the defense department helped to win this
long-term contract. Prior to this, American Water Works has
rendered services at nine other military installations across the
We believe this deal will open up new military installation
opportunities in the U.S. Besides serving service personnel the
company also caters to nearly 14 million customers across 30 U.S.
states and some parts of Canada.
American Water Works is consistently working on a strategy to
increase its presence in the U.S. through organic as well as
inorganic ways. In 2013, the company completed 15 acquisitions
and invested close to $1 billion to upgrade and improve its
We expect the company to win more contracts in 2014. This will
enable it to meet its 2014 guidance of $2.35-$2.45 per share, up
8.3% to 10.4% from the 2013 forecast.
Recently, another U.S.-based water utility
Aqua America Inc.
) expanded its operations by acquiring four water systems and two
wastewater systems. Aqua America also invested nearly $216.1
million in the first nine month of 2013 to upgrade its existing
As per the U.S. Environmental Protection Agency's report, the
U.S. utility providers need to spend $384 billion through 2030 to
revamp and upgrade the ageing water systems in the U.S. We expect
other water utilities like
California Water Service Group
) among others to continue to invest and improve the ageing water
American Water Works currently has a Zacks Rank #3 (Hold). A
better-ranked water utility is
Connecticut Water Service Inc
). Connecticut Water Service carries a Zacks Rank #2 (Buy).