American Water Works Company, Inc. AWK announced that its unit, Missouri American Water, acquired the City of Neosho Water and Wastewater Systems for $34.5 million. This new acquisition will increase the existing water and wastewater customer base by 5,400 and 5,400 units.
Missouri American Water plans to invest $35 million in upgrades to the Neosho Water and Wastewater Systems over the next five years and provide quality services to the customers in the region.
These infrastructure upgrades aim to modernize facilities, replace aging water and wastewater mains, and install smart technology for leak detection and regulatory compliance. Additionally, the project will replace the Buffalo Creek lift station and eliminate all lead and galvanized steel service lines.
American Water Works is expanding its customer base through regulated acquisitions as well as organic growth. Through June 30, 2026, the company added about 52,000 customer connections from acquisitions, including roughly 47,000 connections from the Nexus systems acquired on June 1. The Nexus transaction expanded operations across eight states and was completed ahead of the company’s initial timeline.
The proposed American Water Works’ merger with Essential Utilities WTRG remains targeted for the first quarter of 2027. The transaction is designed to create a larger regulated water and wastewater utility with operations across 17 states and greater scale for future investment and customer service. WTRG’s shareholders will own about 31% of the combined company.
Fragmented Water Industry Needs Consolidation
Mergers and acquisitions help water utilities improve efficiency, service quality and infrastructure. Financial constraints often prevent smaller operators from upgrading aging systems, creating opportunities for larger utilities to acquire them, expand their service territories and fund infrastructure improvements.
The U.S. water industry remains highly fragmented, with more than 50,000 community water systems and 14,000 wastewater systems. Smaller operators often lack the scale and financial resources to manage rising costs, infrastructure upgrades and regulatory requirements efficiently.
California Water Service Group CWT stated that it has agreed to acquire Nexus Water Group’s Nevada and Oregon water and wastewater systems for $218 million. The transaction is expected to be closed by the end of 2026. In July 2026, California Water Service completed the acquisition of Palm Mutual Water Company, which added more than 300 customers.
Share Price Movement of AWK
In the past three months, American Water Works' shares have rallied 15.3% compared with the industry’s 7.2% growth.
Price Performance (three months)
Image Source: Zacks Investment Research
AWK’s Zacks Rank & A Key Pick
American Water Works currently carries a Zacks Rank #3 (Hold).
A better-ranked stock to consider from the same industry is Global Water Resources GWRS, which carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for 2026 and 2027 earnings per share for GWRS has moved up 12.5% and 18.18%, respectively, in the past 60 days. The current dividend yield of the company is pegged at 3.45%, which is better than the industry yield of 2.48%.
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American Water Works Company, Inc. (AWK): Free Stock Analysis Report
California Water Service Group (CWT): Free Stock Analysis Report
Global Water Resources, Inc. (GWRS): Free Stock Analysis Report
Essential Utilities Inc. (WTRG): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).