HomeMost PopularInvestingExpansion of American Water (AWK) Through BASA Acquisition

Expansion of American Water (AWK) Through BASA Acquisition

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American Water Works Company, Inc.’s (AWK) subsidiary, Pennsylvania American Water, has received the Pennsylvania Public Utility Commission’s approval to acquire the Butler Area Sewer Authority (β€œBASA”) wastewater system for $230 million. The transaction is set to be finalized by the end of 2023.

This strategic acquisition will expand Pennsylvania American Water’s coverage to over 32.5 square miles and incorporate nearly 15,000 consumers in the Butler area. The company plans to invest more than $75 million in the water system acquired from BASA for enhancing the wastewater system and implementing essential treatment and collection system upgrades.

Fostering Growth

As of September 30, 2023, American Water had successfully closed 14 agreements to acquire assets in six states, resulting in an additional 7,900 customer connections. With 32 acquisitions under contracts, an additional 88,100 customers are expected to join the company’s existing base.

American Water Works is committed to investing $2.9 billion in 2023 to fortify and expand its water and wastewater infrastructure. These strategic acquisitions will not only expand the company’s customer base but also enable it to uphold and deliver high-quality services to its new customers by investing in the enhancement of the acquired assets.

Additionally, in the long term, American Water aims to invest within the range of $16-17 billion from 2024 to 2028, and $34-$38 billion between 2024 and 2033.

Performance Analysis

Over the past month, AWK shares have seen a remarkable 2.9% surge, outperforming the industry’s 1.5% increase.Industry

Zacks Investment Research

Image Source: Zacks Investment Research

Zacks Rank & Key Picks

American Water currently holds a Zacks Rank #3 (Hold).

You can view the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked companies within the same industry include Veolia Environnement SA (VEOEY), California Water Service Group (CWT), and SJW Group Inc. (SJW). Veolia boasts a Zacks Rank #1, whereas California Water and SJW Group presently have a Zacks Rank #2 (Buy).

VEOEY anticipates a long-term (three- to five-year) earnings growth rate of 8.7%. The Zacks Consensus Estimate for VEOEY’s 2023 earnings per share (EPS) indicates a substantial increase of 239% over the 2022 reported figure.

The Zacks Consensus Estimate for CWT’s 2023 EPS suggests a year-over-year rise of 7.9%. Similarly, the Zacks Consensus Estimate for 2023 sales indicates a 0.4% increase from the 2022 reported figure.

Looking at SJW, the Zacks Consensus Estimate for its 2023 EPS points to a 5% year-over-year increase. Furthermore, the Zacks Consensus Estimate for its 2023 sales suggests a substantial rise of 4.7% over the 2022 reported figure.

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For those interested in a detailed analysis:

American Water Works Company, Inc. (AWK) : Free Stock Analysis Report

California Water Service Group (CWT) : Free Stock Analysis Report

SJW Group (SJW) : Free Stock Analysis Report

Veolia Environnement SA (VEOEY) : Free Stock Analysis Report

Click here to read the full article on Zacks.com

Source: Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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