American Water (AWK) Arm to Replace Water Mains in Missouri

American Water Works AWK announced that its subsidiary, Missouri American Water will replace two water mains, one in Ballwin and the other in St. Louis County, MO. Both the projects will replace the water main pipes installed in 1950s that have reached the end of their effective service life.

These water main replacement projects are part of Missouri American Water’s projected $92-million capital investment in water main replacements in St. Louis County in 2020. Year to date, the company has replaced more than 30 miles of water mains in the county. The upgrades and replacement of water mains will ensure service reliability, and prevent wastage and contamination of potable water.

American Water has been ensuring 24x7 potable water and wastewater services to nearly 15 million people across the United States. American Water continues to make repairs and replacement, as well as upgrade its existing water and wastewater infrastructure to provide high-quality services to the expanding customer base. American Water Works has plans to invest $8.8-$9.4 billion in the 2020-2024 time period and $20-$22 billion in the next decade.

Water Mains Need Replacement

Water mains of the United States are gradually approaching the end of effective service life. Per a finding from American Society of Civil Engineers, there are 240,000 water main breaks per year in the United States, which results in the wastage of more than 2 trillion gallons of treated drinking water.

Per American Water Works Association, an estimated $1 trillion is necessary to maintain and expand services to meet demand over the next 25 years. In February 2020, the U.S. Environmental Protection Agency (EPA) announced the availability of $2.7 billion for State Revolving Funds. This funding will help protect surface water and provide safe drinking water to communities across the United States.

In addition to EPA, the water utilities operating in the United States are also making regular investments in upgrading and replacing the aged water mains in their service territories.

Flight Against COVID-19

Per the World Health Organization, washing hands with soap at regular intervals and maintaining social distancing are crucial measures to prevent the spread of the novel coronavirus. Hence, the continuous supply of water is essential. Due to extended lockdown, many utility customers are facing financial crisis and might not be in a position to pay utility bills.

Water utilities like California American Water CWT and American Water Works, among others, have already announced that they will continue providing services to customers, even if they fail to repay dues amid this unprecedented economic crisis resulting from the virus outbreak.   

Zacks Rank & Key Picks

Currently, American Water has a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the same industry include American States Water Company AWR and Middlesex Water Company MSEX. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

American States Water, sporting a Zacks Rank #1 at present, delivered average positive earnings surprise of 6.5% in the last four quarters. The Zacks Consensus Estimate for 2020 earnings has moved up 3.2% in the past 90 days.

Middlesex Water Company, currently holding a Zacks Rank #2 (Buy), delivered average positive earnings surprise of 2.2% in the last four quarters. The Zacks Consensus Estimate for 2020 earnings has moved up 1% in the past 90 days.

Price Performance

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

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Middlesex Water Company (MSEX) : Free Stock Analysis Report
 
American States Water Company (AWR) : Free Stock Analysis Report
 
American Water Works Company, Inc. (AWK) : Free Stock Analysis Report
 
California Water Service Group (CWT) : Free Stock Analysis Report
 
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