American Water Works Company, Inc.
) continues to upgrade its existing utility infrastructure.
Recently, the company's unit Missouri American Water announced
that it has completed a vital water main replacement project in
St. Louis County, Mo.
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Per the guidelines of the project, the company has replaced a
73-year old water line of approximately 11,100-feet long. In
addition, Holloran Contracting, on behalf of Missouri American
Water, will complete the final road resurfacing along Manchester
Road within the next couple of weeks.
The infrastructure upgrade program will enable Missouri American
Water to reduce the water main breaks while improving reliability
of the water system in the St. Louis area.
As per a U.S. Environmental Protection Agency's report, the U.S.
utility providers need to invest $384 billion through 2030 for
restoring and improving drinking water system. It is evident from
American Water Works' activities that it is investing heavily in
infrastructure upgrades like its water utility peers
Aqua America Inc.
Connecticut Water Service Inc.
Missouri American Water upholds about 4,200 miles of water mains
in the St. Louis area. The company has planned to invest roughly
$0.1 billion for upgrading the water main in St. Louis County
over a two-year timeframe ending Dec 2013.
We remind investors that American Water Works invested $0.43
billion under its capital spending program during the first six
months of 2013, primarily for several growth projects. In 2013,
the company plans to spend around $1 billion in different
ventures to ensure the safety and standard of its utility
During the first six months of 2013, American Water Works' net
cash from operating activities was $0.3 billion and the cash
balance as of Jun 30, 2013 was $20.4 million. Recently, the
company strengthened its existing liquidity position by raising
commitments under its revolving credit facility and commercial
paper program. We believe that a stable financial position
enables the company to follow steady infrastructure development
activities along with strategic acquisitions.
These initiatives will subsequently help the company to provide
uninterrupted water supply to its customers, improve consumer
confidence and public safety while maintaining government water
However, we remain concerned about the stringent government
regulations for maintaining water supply, health and safety
standard and treatment of wastewater, risks related to severe
weather conditions, and higher expenditure for construction and
modernization of utility assets, which may challenge American
Water Works' future performance.
American Water Works currently has a Zacks Rank #3 (Hold).
However, another water utility that is currently performing well
Consolidated Water Co. Ltd.
) with a Zacks Rank #1 (Strong Buy).