American Water (NYSE:AWK) Works AWK announced that its unit, New Jersey American Water, is going to invest $4 million for improving the water infrastructure in Roselle Park. The company plans to replace more than 2 miles of aging water main with new 8- and 12-inch ductile iron main, and replace 17 fire hydrants as well as 201 utility-owned service lines along the pipeline route.
The work will start from this week and is scheduled to be completed by the end of this year. All these upgrades will ensure an increase in water flow for customers and adequate supply of water for fire fighters.
New Jersey American Water regularly invests to upgrade, maintain and expand the existing infrastructure. This project is part of its multimillion-dollar initiative to improve the quality of water and wastewater infrastructure.
Aging Water Infrastructure
Potable water supply and wastewater services on a 24x7 basis are essential for maintaining hygiene as well as performing daily chores. However, aging of pipelines and resultant breaks in water mains are primary concerns that may disrupt water services.
Per the findings of the American Society of Civil Engineers, water main breaks occur every two minutes in the United States due to aging of the existing water infrastructure. Pipeline breaks result in the wastage of 6 billion gallons of potable water each day and add to the loss of water utility operators. Per the Water and Wastewater Equipment Manufacturers Association, an estimated $750 billion investment is necessary to maintain and expand drinking water as well as wastewater services to meet demand over the next 20 years.
Utilities’ Investment in Infrastructure
Water utilities operating in the United States are trying their best to upgrade and maintain the aging water infrastructure. The water utilities invest in the resiliency of their systems that are impacted by floods, fires, hurricanes and extreme weather conditions.
American Water continues to make investments in its infrastructure to upgrade, enhance and maintain the same. The company has plans to invest $10.4 billion in the 2021-2025 time period and $22-$25 billion in the next decade.
In addition to American Water, water utility California Water Service (NYSE:CWT) CWT plans to invest in the range of $270-$300 million in 2021 to strengthen its water and wastewater infrastructure. Another water utility, Middlesex Water MSEX — under the Water for Tomorrow program — is making regular capital investments to enhance system reliability, resiliency and overall service quality. Essential Utilities (NYSE:WTRG) WTRG is also making regular investments to upgrade the existing water and wastewater systems. Its long-term plan is to invest nearly $3 billion through 2023 to rehabilitate, and strengthen water as well as natural gas pipeline systems.
Price Performance
Shares of American Water have outperformed the industry in the past year.
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Zacks Rank
American Water currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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