American Water Works' Subsidiary Acquires Mesa Del Sol Water System

American Water Works’ AWK subsidiary, California American Water, has completed its acquisition of the Mesa Del Sol water system in the Corral de Tierra area of Salinas. The acquisition adds 15 new water connections to the company’s current customer base, which already includes approximately 40,000 connections on the Monterey Peninsula and other parts of Monterey County.

The system was acquired after an effort to physically connect the Mesa del Sol system to the Toro Park system of California American Water in order to address Mesa Del Sol's water quality issues. As a result of this acquisition, residents of Mesa Del Sol will get access to California American Water's industry knowledge and experience. The new customers will now have access to a bilingual website and information, online billing and payment, conservation services and affordability programs.

Acquisitions Remain AWK's Top Priority

American Water Works expanded its operations through systematic acquisitions. In 2024, it completed 13 acquisitions, which added 69,500 customers. Including customers added through acquisitions, the company added 90,000 customers to its existing base. American Water Works completed three acquisitions in three states as of April 30, 2025. The pending 18 acquisitions (as of April 30, 2025), when completed, will add another 37,400 customers to its customer base. Acquisitions enable the company to generate new demand for its services and expand its revenue stream.

In April 2025, AWK’s subsidiary, New Jersey American Water, acquired the water system of Shrewsbury Township’s Alfred Vail Mutual Association community. This purchase, which serves 265 customer connections, followed the approval of the New Jersey Department of Community Affairs and the New Jersey Board of Public Utilities. This is New Jersey American Water’s seventh acquisition in the last five years, adding more than 17,000 new water and/or wastewater customers.

American Water Works expects to invest $40-$42 billion between 2025 and 2034 in infrastructure repairs and replacements, system resiliency and regulated acquisitions.

Merging Utilities Can Assist the Aging Water Industry

According to the American Society of Civil Engineers, there are nearly 50,000 community water systems and 14,000 wastewater treatment systems in the United States. These systems play a crucial role in providing clean drinking water and treating wastewater, which are essential for public health and the environment. Some service providers are too small and financially weak to make necessary and expensive repairs on time, which increases the risk of contamination, breaks pipelines and disrupts services. Due to the delay in pipeline repairs and maintenance, billions of gallons of treated water are lost every year in the country.

Large water utility companies are acquiring smaller rivals to ensure that customers receive high-quality services and that the necessary funds are available to upgrade both acquired and outdated infrastructure. Further consolidation is required to benefit from the poor pace of mergers and acquisitions.

Here are some other companies that are also focused on expanding operations through acquisitions:

In April 2025, Middlesex Water Company MSEX announced that its unit Tidewater Utilities, Inc. has acquired the water assets of the Town of Ocean View (“TOV”) in Sussex County, DE, for $4.6 million. The acquisition of TOV’s assets will expand Middlesex Water’s operation in Delaware and add 900 customers to its existing base.

MSEX’s long-term (three to five years) earnings growth rate is 6.1%. The Zacks Consensus Estimate for 2025 earnings per share (EPS) implies year-over-year growth of 2.4%.

Since 2015, Essential Utilities WTRG has acquired over $518 million in rate base and added more than 129,000 new customers or equivalent dwelling units to its footprint. It has a significant backlog of pending acquisitions, including five signed purchase agreements for wastewater systems, expected to add over 210,000 customers and total approximately $340 million.

WTRG’s long-term earnings growth rate is 5.18%. The Zacks Consensus Estimate for 2025 EPS implies year-over-year growth of 6.6%.

California Water Service Group’s CWT primary focus is to expand operations in the western United States through acquisitions. In 2024, CWT acquired Kings Mountain Park Mutual Water Company's water system assets, and Hawaii Water Service acquired Kukui'ula South Shore Community Services' wastewater system assets.

CWT’s long-term earnings growth rate is 8.78%. The Zacks Consensus Estimate for 2025 sales implies a year-over-year decline of 7.3%.

AWK’s Stock Price Performance

In the past six months, shares of the company have risen 4.9% compared with the industry’s 5.2% growth.

AWK’s Zacks Rank

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

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