California Water Service Group CWT invested a record $471 million in capital improvements throughout its service areas in 2024. Infrastructure improvements completed last year exceeded the previous high investment recorded in 2023 by $87 million.

Group subsidiary California Water Service’s annual Main Replacement Program, the largest portion of the company’s infrastructure improvement plans, accounted for $156 million in completed projects. In 2024, the company installed 189,135 feet of pipe, or nearly 36 miles through this program.

CWT’s Long-Term Investment Plan

California Water continues to execute its capital investment plan, which includes projects designed to protect its assets from natural disasters. The company plans to invest nearly $660 million, $750 million and $655 million in 2025, 2026 and 2027, respectively.

On July 8, 2024, the company’s subsidiary, Cal Water, submitted Infrastructure Improvement Plans (the Plans) for its California districts from 2025 to 2027 in its 2024 GRC application with the CPUC. In the Plans, Cal Water proposed to invest more than $1.6 billion in its districts from 2025 to 2027, including nearly $1.3 billion of newly proposed capital investments. About 46% of the proposed new infrastructure improvements are to replace aging water pipelines. Such improvements are designed to enhance customers’ water supply reliability.

The Plans also include water quality upgrades to treat existing and newly regulated contaminants, infrastructure replacements to help ensure reliable delivery of water service and equipment such as generators to help withstand power outages and shutoffs, and solar installation projects to help reduce Cal Water’s dependency on the electric power grid and lessen environmental footprint.

These initiatives are focused on improving resiliency and sustainability, reflecting CWT’s efforts to enhance quality, service, and value for its customers.

Water Industry’s Need for Huge Investments

The water and wastewater infrastructure is aging and gradually nearing the end of its effective service life. Per 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. This industry needs more investments for maintenance and upgrade.

According to the U.S. Environmental Protection Agency, an estimated $963 billion investment is necessary to maintain and expand drinking water and wastewater service to meet demand over the next 20 years. This massive investment requirement also creates an opportunity for growth among operators in this space.

Along with CWT, other companies like American Water Works AWK, American States Water AWR and Essential Utilities WTRG are also making systematic investments to upgrade infrastructure.

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. In the long term, it aims to invest in the range of $17-$18 billion in the 2025-2029 period and in the band of $40-$42 billion during 2025-2034.

AWK’s long-term (three-to-five-year) earnings growth rate is 8.3%. The Zacks Consensus Estimate for 2025 earnings per share (EPS) indicates a year-over-year increase of 5.9%.

Strategic capital investments are making American States Water’s infrastructure stronger and resilient. The regulated utilities invested $235.5 million in company-funded capital projects in 2024 and expect capital expenditures of $573.1 million during 2025-2027.

AWR’s long-term earnings growth rate is 1.75%. The Zacks Consensus Estimate for 2025 EPS indicates a year-over-year increase of 5.4%.

Essential Utilities will continue to make systematic investments to strengthen its water, wastewater and natural gas infrastructure. The company has already invested $1.32 billion in 2024. It also plans to invest $7.8 billion through 2025-2029.

WTRG plans to invest $1.4-$1.5 billion in its infrastructure in 2025. Its long-term earnings growth rate is 6.58%. The Zacks Consensus Estimate for 2025 EPS indicates a year-over-year increase of 7.6%.

CWT’s Stock Price Performance

In the past month, shares of CWT have risen 4.8% compared with the industry’s 10.1% growth.

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CWT’s Zacks Rank

The company currently carries 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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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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