Aqua America Indiana Unit to Expand Waste Water Service - Analyst Blog

Water and wastewater service provider, Aqua America Inc. (WTR) has taken strategic initiatives to strengthen its position in Indiana. The company, through its Indiana unit, Aqua Indiana, has entered into a partnership with City of Fort Wayne to expand its waste water service in Allen County. In a separate deal, Aqua America completed the sale of its drinking water system assets in southwest Allen County to City of Fort Wayne.

The private-public partnership with City of Fort Wayne will increase the company's wastewater treatment capacity in the region. This strategic partnership and its existing capability will enable Aqua Indiana to treat more than 1.5 million gallons per day of wastewater from the city's sewer system in western and southwestern Allen County.

At present, maintenance and repair of the old water pipelines, along with expansion of the existing infrastructure to meet increasing customer demand, are the basic requirements in the water utility space. The sale of its drinking water system generated $67 million and the company intends to invest nearly $50 million in improving its water and wastewater infrastructure.

Aqua America Inc. has been a consistent performer, surpassing the Zacks Consensus Estimate in three out of the last four quarters with an average beat of 2.92%. The company follows an active inorganic growth strategy to expand its market penetration and completed 13 acquisitions in the first nine months of 2014.

Apart from Aqua America, other operators in the water utility space also resort to the inorganic route or strategic partnership to expand operations. Recently, another water service operator American Water Works Company, Inc. (AWK) completed the acquisition of Hardin County Water Company in southern Illinois.(Read: American Water's Illinois Unit Acquires Hardin County Water)

Aqua America Inc. currently has a Zacks Rank# 2 (Buy). Other operators in the same space, which look attractive at the current level, include American States Water Company (AWR) and Artesian Resources Corp. (ARTNA). Both stocks carry the same Zacks Rank as Aqua America.