As per media report,
American States Water Company
) has decided to acquire Rural Water Co. which serves nearly 940
customers in Arroyo Grande, Calif. The terms of the agreement
were not disclosed.
American States Water is a reliable water supplier, catering to 1
out of every 36 Californians. This present acquisition might not
change the existing equation but is definitely a positive move
towards expanding its operation in the state.
It appears that large water utilities are favoring the inorganic
route to increase their customer base. Pennsylvania American
Water, a unit of
American Water Works Company
), acquired three water units in a span of three months to expand
its operations in Pennsylvania.
A report from Economic Development Research Group Inc. suggests
an alarming gap between the water infrastructural requirement and
actual investments in the coming years. The gap is expected to
reach $84 billion in 2020 and might touch $144 billion in 2040.
The report also revealed that without proper renewal or
replacement, nearly 44% of the existing pipelines will become too
weak for operation by 2020.
While water utilities are taking steps and investing regularly to
bridge the gap, more efforts are required to minimize the
difference. We believe consolidation of the smaller units under
the umbrella of a bigger water and wastewater operator could be a
positive step in that direction. The synergies of merger and
decline in overhead operating expenses could allow the companies
to concentrate more in development and maintenance of its
In addition, timely favorable decision by the commissions on
water rate filing will ensure steady flow of investments from the
water utility operators. Water utility operators are also
enhancing their supply capacity through organic ways to cope with
the increasing demand for water. We believe that spreading public
awareness on effective use of water as well as replacement of the
main pipelines can curb wastage.
American States Water Company currently has a Zacks Rank # 2
(Buy). Other operators in the industry that are performing well
Consolidated Water Co. Ltd.
Middlesex Water Co.
). Both of these companies currently carry a Zacks Rank #2 (buy).
Based in San Dimas, California, American States Water Company was
founded in 1929. The company caters to customers in the United
States and distributes water, electricity and other allied
AMER WATER WORK (AWK): Free Stock Analysis
AMER STATES WTR (AWR): Free Stock Analysis
CONSOLTD WATER (CWCO): Free Stock Analysis
MIDDLESEX WATER (MSEX): Free Stock Analysis
To read this article on Zacks.com click here.