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MECHANICSBURG, Pa. - Pennsylvania American Water, a subsidiary of American Water (NYSE:AWK) - a utility company with a market capitalization of $26.8 billion and strong revenue growth of 11.8% over the last twelve months - announced Wednesday it has signed an agreement to acquire the City of Pittston’s wastewater collection system for $26.4 million. The system serves approximately 4,400 customers throughout the city.
The company, which already provides drinking water services to Pittston residents, has committed to investing more than $5.1 million in system upgrades over the first five years following the acquisition. These improvements will include main replacements, technology updates, security enhancements, and geographic information system improvements. According to InvestingPro data, American Water has maintained dividend payments for 18 consecutive years and currently offers a dividend yield of 2.4%, demonstrating its commitment to shareholder returns while investing in infrastructure.
"After a thorough and professional vetting process of potential purchasers, Pennsylvania American Water has presented the most beneficial proposal," said Pittston Mayor Michael Lombardo in a statement released with the announcement.
The city plans to use proceeds from the sale to support essential services and community improvements, including the Market & Main project featuring a seven-story building with housing, retail, and the 630-seat American Theatre.
Under the agreement, Pittston customers would maintain their current collection rates at the time of transaction closing. Any future rate changes would require review and approval by the Pennsylvania Public Utility Commission. The Wyoming Valley Sanitary Authority will continue to provide wastewater treatment services and bill customers directly.
Pennsylvania American Water, a subsidiary of American Water (NYSE:AWK), currently serves approximately 2.4 million people across Pennsylvania. The company will seek necessary regulatory approvals and expects to complete the transaction by late 2026, according to the press release statement. With a gross profit margin of 60.3% and analysts predicting continued profitability, InvestingPro analysis suggests the company is currently trading above its Fair Value. Investors can access detailed financial analysis and 8 additional ProTips about AWK through InvestingPro’s comprehensive research reports.
In other recent news, American Water Works Company, Inc. reported its first-quarter 2025 financial results, revealing a revenue of $1.14 billion, which exceeded analyst expectations of $1.12 billion. However, the company’s earnings per share (EPS) came in slightly below forecasts at $1.05, compared to the anticipated $1.09. Despite the EPS miss, the company demonstrated a notable 11% increase in earnings from the previous year. In a strategic move, American Water Works announced an agreement to acquire water and wastewater systems from Nexus Regulated Utilities, LLC for approximately $315 million, expanding its customer base by nearly 47,000 connections across eight states. This acquisition is part of the company’s growth strategy and is subject to regulatory approval, with completion expected by August 2026. Additionally, Argus analysts maintained a Buy rating on American Water Works with a price target of $155, citing the company’s consistent revenue growth and strategic acquisitions. The company also announced the appointment of Raffiq Nathoo to its board of directors, bringing extensive financial expertise to the governance team. These developments reflect American Water Works’ ongoing efforts to enhance its market presence and financial performance.
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