American Water Works Company Inc.
) received a $1.8 million contract from the Israel-U.S.
Binational Industrial Research and Development (BIRD) Foundation
to reduce the wastage of water. The company will work jointly
with Steam Control Ltd. in a two-year project to lower the
wastage of water.
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The BIRD Foundation supports cooperation between Israeli and
American companies for the exchange of technological expertise.
The foundation to nurture projects like these also provides 50%
of the estimated project cost. The foundation does not demand a
refund of the investment if the project fails to reach the sales
The program will aim to install modification in the existing
pipeline. This will automatically ease the water pressure when
there is a decline in demand from customers. The need to control
water pressure in a system is essential as an international study
showed consistent strong pressure increases the probability of
leakage and failure of the pipeline systems.
The modification introduced by American Water Works Company will
vary water pressure as per demand. This will help to conserve
water and lower the possibility of water leakage. The innovation
is also expected to lower maintenance costs at it will reduce the
occurrence of main breaks.
We believe the company's consistent R&D efforts in improving
water quality and providing water solution have helped it to
clinch the BIRD contract. The company invested $2.8 million on
research and development in 2012. The research supports effective
usage of water thereby ensuring reliable service at reasonable
American Water Works Company missed our earnings estimate in the
first quarter of 2013. The company projects 2013 earnings in the
range of $2.15 to $2.25 per share. We project long-term earnings
growth of 8% and our earnings expectation for 2013 is presently
$2.22 per share, which is near the higher end of the guidance.
American Water Works Company currently has a Zacks Rank # 3
(Hold). Other water utilities, which are doing well include
American States Water Company
Aqua America, Inc.
Middlesex Water Co.
). All of them presently carry a Zacks Rank #2 (Buy).
Voorhees, N.J.-based American Water Works Company was founded in
1886. The company serves around 14 million people with water and
water related services. With 6,700 employees, the company's
market capitalization is $7.53 billion.