American Water's Unit to Invest $1.6M to Replace Water Mains

American Water Works AWK announced that its subsidiary, Pennsylvania American Water is going to invest $1.6 million for replacing more than 1 mile of aging water mains in the Philipsburg area. These upgrades will ensure improved services to nearly 7,700 customers in Clearfield and Centre counties.

Pennsylvania American Water is very active in upgrading and maintaining its existing water and wastewater infrastructure to provide reliable services to customers in Pennsylvania. Last week, the company announced plans to invest $0.72 million for replacing aging water mains and has started construction to replace 3,000 feet of water mains in Washington County.

Pennsylvania American Water currently provides reliable water and wastewater services to more than 2.4 million residents in Pennsylvania.

Upgrades Essential for Aging Infrastructure

The U.S. water and wastewater infrastructure is aging and requires a large amount of investments for upgrades, repair and addition of new pipelines to support the aging systems. According to the American Water Works Association, an estimated $1 trillion investment is necessary to maintain and expand the drinking water service to meet demand over the next 25 years. So, huge efforts are needed from private operators and funding is required from government agencies to upgrade and maintain the aging water, as well as wastewater facilities.

Due to thousands of pipeline breaks each year, billions of gallons of precious potable water are wasted, which also creates the possibility of contamination of potable water sources. So, regular maintenance and upgrades of the old water mains are the only solution to this problem. American Water has been investing regularly to strengthen its water and wastewater infrastructure. The company has plans to invest $8.8-$9.4 billion in the 2020-2024 time period and $20-$22 billion in the next decade.

In addition to American Water, Essential Utilities WTRG is also making regular investments in water and wastewater systems. Its long-term plan is to invest $2.8 billion in the 2020-2022 time period to rehabilitate and strengthen the existing water and natural gas pipeline systems. Another water utility, California Water Service CWT recently completed the Palos Verdes Peninsula Water Reliability Project that will help to support the existing 60-year-old drinking water pipeline and provide assistance to the system during natural disasters. The company aims to invest nearly $809.0-$828.0 million in the 2019-2021 period to strengthen its infrastructure.

Price Performance

Shares of American Water have outperformed the industry in the past 12 months.

Zacks Rank & Another Key Pick

American Water Works has a Zacks Rank #2 (Buy). Another top-ranked stock in the same industry is Primo Water Corporation PRMW, which currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Primo Water delivered an average earnings surprise of 34.4% in the last four quarters. The Zacks Consensus Estimate for its 2020 earnings has moved 21.2% upward to 40 cents per share in the past 90 days.

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