American Water Works AWK announced that its unit, Pennsylvania American Water, has invested $675 million to upgrade its existing infrastructure in 2024. Pennsylvania American Water invested $92 million in the company’s wastewater systems and $583 million in its water systems.

A major portion of the existing water and wastewater infrastructure is aging and gradually nearing the end of its effective service life. Hence, it is essential that the water utilities continue to make investments in essential maintenance and upgrades. Pennsylvania American Water plans to invest more than $586 million in 2025 to improve its water and wastewater treatment plants and systems.

American Water Works’ Long-Term Investment Plan

American Water Works has been investing regularly to upgrade, expand and maintain its vast water and wastewater infrastructure. The company plans to invest $3.3 billion in 2025 to strengthen and expand its water and wastewater infrastructure, with a major portion utilized for infrastructure improvements in Regulated Businesses. In the long term, the company aims to invest in the range of $17-$18 billion in the 2025-2029 period and $40-$42 billion in the 2025-2034 period.

The ongoing investments allow the company to meet the rising demand from its expanding customer base efficiently. In 2024, American Water Works completed 13 acquisitions, which added 69,500 customers. Including customers added through acquisitions, the company added 90,000 customers to its existing base. In 2025, it is expected to add more customers through organic and inorganic means.

Investment Essential for the Water Industry

Precious potable water is wasted in the United States every day, primarily due to the aging of the existing infrastructure. According to the findings of the American Society of Civil Engineers, water main breaks occur every two minutes in the United States due to the aging of the existing water infrastructure.

Per the U.S. Environmental Protection Agency (“EPA”), an estimated $1.25 trillion investment is necessary to maintain and expand the drinking water and wastewater service to meet demand over the next 20 years. The massive investment requirement also creates an opportunity for growth among operators in this space. The Bipartisan Infrastructure Law provided $50 billion to EPA to strengthen the drinking water and wastewater systems of the United States.

Water utilities like Essential Utilities WTRG, California Water Service CWT and American States Water AWR, among others, are regularly investing to strengthen their existing infrastructure.

Essential Utilities will continue to make systematic investments to strengthen its water, wastewater and natural gas infrastructure. It plans to invest $7.8 billion through 2025-2029 to improve the water and natural gas systems and better serve customers using enhanced information technology. The Zacks Consensus Estimate for 2025 and 2026 EPS indicates year-over-year growth of 7.6% and 5.6%, respectively.

California Water Service plans to invest $660 million in 2025 to further strengthen its operations. The estimated capital expenditure for the 2025 to 2027 period is $2.06 billion. The company is making regular investments in upgrades and proper maintenance of its water and wastewater infrastructure. The Zacks Consensus Estimate for 2026 EPS implies year-over-year growth of 8.3%.

American States Water expects to invest $573.1 million during the 2025-2027 period. Strategic capital investments are making AWR’s infrastructure stronger and more resilient. The Zacks Consensus Estimate for 2025 and 2026 EPS suggests year-over-year growth of 5.4% and 5.8%, respectively.

Price Performance

American Water Works shares have gained 24.1% in the past year compared with its industry’s rally of 15.9%.

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Zacks Rank

American Water Works currently has a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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This article originally published on Zacks Investment Research (zacks.com).

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