American Water's Illinois Unit Acquires Hardin County Water - Analyst Blog

A subsidiary of American Water Works Company, Inc. (AWK), Illinois American Water has completed the acquisition of Hardin County Water Company in southern Illinois. The acquisition was approved by the Illinois Commerce Commission (ICC) in Nov 2014.

The system of Hardin County Water Company will be incorporated into Illinois American Water's southern Illinois service area. The acquisition is set to add roughly 500 customers to the subsidiary's existing 1.2 million customer base.

This deal has some good news in store for Hardin County Water's existing customers. Currently, Hardin County's customers use approx 5,000 gallons of water a month and pay around $70 for the water service. Following the acquisition, the same customers will be required to pay around $42 per month, under Illinois American Water's single-tariff pricing rate structure.

In Sep 2014, another unit of American Water, Military Services Group, secured a contract from the U.S. Department of Defense (DoD) to own, operate and maintain the potable and service water and wastewater systems at Picatinny Arsenal, NJ (read: American Water Works Unit Wins Picatinny Arsenal, NJ Deal). With this win, American Water now serves 11 military installations across the country.

American Water follows an inorganic growth strategy and at the same time gives due attention to systematic organic growth. The company closed four acquisitions in the third quarter of 2014 which added about 2,200 customers to its total count. In the same time frame, the company spent $314 million in improvements of pumps, plants and pipes that deliver water and water services.

The company aims to invest a total of $1 billion in its infrastructural programs by the end of this year. These initiatives will enable the company to deliver reliable services to its customers, while maintaining government regulations and public safety.

Stocks That Warrant a Look

American Water currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the water utility space include American States Water Co. (AWR), Aqua America Inc. (WTR) and Artesian Resources Corp. (ARTNA). All these stocks currently carry a Zacks Rank #2 (Buy).