American Water Unit Acquires Georgetown Water For $6.4M

American Water Works Company Inc. (NYSE:AWK) announced that its subsidiary, Indiana American Water, has completed the acquisition of Georgetown Water System serving customers in Southern Indiana. The buyout worth $6.4 million will increase the company’s customers by 1,300.

Georgetown Water infrastructure was getting old and there was a pressing requirement for upgrade of the old structure for uninterrupted quality water supply. Indiana Utility Regulatory Commission approved the deal as it will help the customers of Georgetown Water System to have quality water services at low rates.

Acquisition Fuels Growth

The old water and wastewater infrastructure needs ample investments, which are easier for bigger players to make. Consolidation would, therefore, drive the necessary infrastructure overhauls for the industry at large.

Year to date, the water utility has added 26,400 customers through closed acquisitions and organic growth and will add another 43,700 customers when all the pending acquisitions are completed.

During the third quarter, American Water Works announced that its subsidiary, California American Water, completed the acquisition of Oxbow Marina Mutual Water Company. ( Read more: :American Water Unit Acquires Oxbow Marina Mutual Water)

Investment to Upgrade Aging Infrastructure

The U.S. water infrastructure in quite old and massive investment is required to upgrade the existing water and wastewater systems. Some of the water mains are nearly a century old and require immediate replacement. Investment of billions of dollars is required for the purpose.

American Water Works aims to invest $6.7-$7.3 billion from 2017 through 2021, which will help it boost earnings by 7-10% per year in the aforesaid period from the 2015 base. In the first nine months of 2017, the company invested more than $1 billion, a majority chunk of which was invested to strengthen operation of its regulated business.

Water Utility Connecticut Water Service Inc. (NASDAQ:CTWS) aims to invest more than $150 million in the 2017-2019 period to strengthen its existing infrastructure. Aqua America Inc. (NYSE:WTR) has plans to make capital investments of more than $450 million in 2017 as part of an ambitious investment target of more than $1.2 billion in the 2017-2019 period.

Price Movement

Shares of American Water Works’ have gained 22.9% in a year, outperforming the Zacks Water Supply industry’s rally of 18.5%.

The company is well poised to benefit from strategic acquisitions and regulated investments to strengthen the existing infrastructure, which, in turn, is expanding customer base and providing a boost to its top line.

Zacks Rank

American Water Works currently carries a Zacks Rank #3 (Hold). A better ranked stock in the same industry is Global Water Resources Inc. (NASDAQ:GWRS) . You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Global Water Resources, a Zacks Rank #2 (Buy) stock, reported positive earnings surprise of 50% in the third quarter. Its 2017 earnings estimate moved up 28.6% to 9 cents in the last 60 days.

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Connecticut Water Service, Inc. (CTWS): Free Stock Analysis Report

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Aqua America, Inc. (WTR): Free Stock Analysis Report

Global Water Resources, Inc. (GWRS): Free Stock Analysis Report

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