tiprankstipranks
Trending News
More News >
Essential Utilities (WTRG)
NYSE:WTRG
Advertisement

Essential Utilities (WTRG) AI Stock Analysis

Compare
785 Followers

Top Page

WTRG

Essential Utilities

(NYSE:WTRG)

Rating:79Outperform
Price Target:
$45.00
â–²(16.46% Upside)
Essential Utilities scores well due to strong financial performance, positive earnings call highlights, and strategic corporate investments. While technical indicators show positive momentum, caution is advised due to potential overbought conditions. Valuation metrics and consistent dividend growth further support the stock's attractiveness.
Positive Factors
Earnings
WTRG outperformed expectations on both revenue and profit, demonstrating strong operational execution.
Financial Performance
The re-initiation of long-term EPS guidance and strong Q3 performance increases confidence in Essential Utilities' multi-year outlook.
Regulatory Approval
The approval of the gas business rate case by the Pennsylvania PUC supports revenue growth, despite an appeal that is not considered a material concern.
Negative Factors
Financial Flexibility
Equity financing came in weaker than expected, with new ATM guidance set at a cumulative $350M for 2024-2025, potentially affecting financial flexibility.
Growth Prospects
The management trimmed rate base guidance for the water segment, which could impact future growth prospects.
Regulatory Challenges
Court proceedings related to the DELCORA acquisition are beyond WTRG's control, leading to uncertainty in EPS and capex guidance.

Essential Utilities (WTRG) vs. SPDR S&P 500 ETF (SPY)

Essential Utilities Business Overview & Revenue Model

Company DescriptionEssential Utilities, Inc., through its subsidiaries, operates regulated utilities that provide water, wastewater, or natural gas services in the United States. It offers water services through operating and maintenance contract with municipal authorities and other parties. The company also provides non-utility raw water supply services for firms in the natural gas drilling industry; and water and sewer line protection solutions, and repair services to households through a third-party. It serves approximately 7.5 million residential water, commercial water, fire protection, industrial water, wastewater, and other water and utility customers in Pennsylvania, Ohio, Texas, Illinois, North Carolina, New Jersey, Indiana, Virginia, West Virginia, and Kentucky under the Aqua and Peoples brands. The company was formerly known as Aqua America, Inc. and changed its name to Essential Utilities, Inc. in February 2020. Essential Utilities, Inc. was founded in 1886 and is headquartered in Bryn Mawr, Pennsylvania.
How the Company Makes MoneyEssential Utilities generates revenue primarily through the sale of water and natural gas services to its customers. The company earns money by charging customers for the consumption of water and natural gas, which is regulated by state public utility commissions. Key revenue streams include monthly billing for residential and commercial services, as well as capital recovery through infrastructure investments. Additionally, Essential Utilities benefits from rate increases approved by regulatory bodies, which allow the company to recoup costs associated with maintaining and upgrading its systems. Significant partnerships with local governments and municipalities also contribute to its earnings, as these agreements often include long-term contracts for service provision.

Essential Utilities Key Performance Indicators (KPIs)

Any
Any
Operating Expense Breakdown
Operating Expense Breakdown
Details core costs like maintenance, labor, and infrastructure, offering insight into how efficiently Essential Utilities manages its resources and where it’s prioritizing investment to ensure reliable water and wastewater services.
Chart InsightsEssential Utilities is experiencing a steady rise in operating expenses, notably in depreciation and operations and maintenance costs. The increase in purchased gas expenses reflects higher gas volumes, aligning with the company's reported revenue growth. Despite these rising costs, the company remains committed to substantial infrastructure investments, projected at $1.4 billion to $1.5 billion in 2025. However, the need for additional equity issuance and regulatory challenges in Pennsylvania could pose financial pressures, potentially impacting future expense management and growth strategies.
Data provided by:Main Street Data

Essential Utilities Earnings Call Summary

Earnings Call Date:Jul 31, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Nov 10, 2025
Earnings Call Sentiment Positive
The earnings call presented several positive achievements, including significant earnings growth, infrastructure investments, and dividend increases. However, weather-related consumption declines and regulatory challenges present ongoing hurdles.
Q2-2025 Updates
Positive Updates
GAAP Earnings Per Share Increase
Reported GAAP earnings per share of $0.38, representing a 35% increase over the same quarter last year.
Record Infrastructure Investment
Reaffirmed capital investment plans with a target of approximately $1.4 billion in infrastructure investment for 2025, with $613 million already deployed.
Dividend Increase
Board of Directors approved a 5.25% increase in the dividend, marking more than 30 years of consecutive increases.
Water Division Growth
Aqua Texas division has grown by nearly 25,000 connections over the last 10 years and currently has another 90,000 under contract or negotiation.
Strong Revenue Growth
Revenues increased by 18.5%, largely due to favorable rate case outcomes and higher purchased gas costs.
Negative Updates
Weather-Related Challenges
Wet weather led to decreased water consumption in several states, impacting revenue.
Interest and Inflation Pressures
Higher interest rates and inflation continue to impact costs, particularly in areas like chemicals.
Pending Regulatory Challenges
Ongoing regulatory challenges in Pennsylvania and delays due to the bankruptcy of the City of Chester affecting DELCORA progress.
Company Guidance
During the Essential Q2 2025 Earnings Conference Call, the company provided guidance indicating a robust performance, with a reported GAAP earnings per share (EPS) of $0.38, marking a 35% increase from the previous year. The company expects to exceed its GAAP EPS guidance range of $2.07 to $2.11 for the fiscal year, driven by nonrecurring benefits. It reaffirmed a capital investment target of approximately $1.4 billion for 2025, with $613 million already deployed as of June 30. The water business anticipates annual rate base growth of 6% through 2029, supported by infrastructure investments. The company also highlighted a dividend increase of 5.25% and showcased its employee engagement efforts, with survey participation rising by 23% and satisfaction scores improving by 6%. On the regulatory front, rate increases in Kentucky and pending cases in North Carolina, Ohio, Texas, and Virginia were discussed. The company aims for a compound annual growth rate of about 8% for its utility rate base, with water and natural gas segments contributing 6% and 11% growth, respectively, while maintaining a strong balance sheet and consistent dividend growth.

Essential Utilities Financial Statement Overview

Summary
Essential Utilities demonstrates strong growth and profitability with robust revenue increases and efficient operations. However, high leverage and negative Free Cash Flow present potential risks. Overall, the company is well-positioned for growth, but careful management of capital expenditures and debt levels is crucial for financial stability.
Income Statement
85
Very Positive
Essential Utilities shows strong financial performance with consistent revenue growth and improving margins. The TTM (Trailing-Twelve-Months) Gross Profit Margin stands at 59.24%, and Net Profit Margin at 27.16%, reflecting efficient cost management. Revenue has grown by 8.21% from the previous annual period, indicating a positive growth trajectory. The EBIT and EBITDA Margins are robust at 38.36% and 56.34%, respectively, showcasing operational efficiency. However, some volatility in revenue from 2022 to 2023 warrants attention.
Balance Sheet
78
Positive
The balance sheet represents a stable financial position with a Debt-to-Equity Ratio of 1.20, which is manageable within the industry context. The Return on Equity (ROE) is strong at 9.49%, demonstrating efficient use of equity capital. The Equity Ratio of 35.25% indicates a solid equity base, albeit with high leverage. The company's asset base is growing, supporting its long-term stability.
Cash Flow
70
Positive
Cash flow analysis shows a mixed picture with a Free Cash Flow to Net Income Ratio of -0.84 in the TTM period, indicating significant capital expenditures. Operating Cash Flow to Net Income Ratio is 1.35, suggesting good cash generation from operations. However, negative Free Cash Flow points to potential liquidity challenges if capital investments do not translate into future growth.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue2.26B2.09B2.05B2.29B1.88B1.46B
Gross Profit1.34B1.22B1.13B1.07B987.30M768.34M
EBITDA1.27B1.25B1.06B1.01B927.66M710.47M
Net Income613.33M595.31M498.23M465.24M431.61M284.85M
Balance Sheet
Total Assets18.33B18.03B16.84B15.72B14.66B13.71B
Cash, Cash Equivalents and Short-Term Investments20.78M9.16M4.61M11.40M10.57M4.83M
Total Debt7.78B7.73B7.09B6.84B6.02B5.73B
Total Liabilities11.87B11.83B10.95B10.34B9.47B9.02B
Stockholders Equity6.46B6.20B5.90B5.38B5.18B4.68B
Cash Flow
Free Cash Flow-518.14M-559.40M-265.52M-462.46M-375.84M-327.62M
Operating Cash Flow829.15M770.34M933.59M600.31M644.68M508.02M
Investing Cash Flow-1.36B-1.16B-1.22B-1.18B-1.06B-4.33B
Financing Cash Flow521.12M397.48M281.36M578.83M417.12M1.96B

Essential Utilities Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price38.64
Price Trends
50DMA
37.80
Positive
100DMA
38.22
Positive
200DMA
37.41
Positive
Market Momentum
MACD
0.39
Positive
RSI
49.80
Neutral
STOCH
26.74
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WTRG, the sentiment is Neutral. The current price of 38.64 is below the 20-day moving average (MA) of 38.98, above the 50-day MA of 37.80, and above the 200-day MA of 37.41, indicating a neutral trend. The MACD of 0.39 indicates Positive momentum. The RSI at 49.80 is Neutral, neither overbought nor oversold. The STOCH value of 26.74 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for WTRG.

Essential Utilities Risk Analysis

Essential Utilities disclosed 36 risk factors in its most recent earnings report. Essential Utilities reported the most risks in the "Production" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Essential Utilities Peers Comparison

Overall Rating
UnderperformOutperform
Sector (66)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
79
Outperform
$10.89B16.6110.02%3.41%20.70%14.59%
76
Outperform
$15.20B7.6530.12%2.47%30.74%143.94%
69
Neutral
$28.58B25.4610.40%2.26%13.37%13.29%
68
Neutral
$2.80B20.108.49%2.63%0.62%-24.24%
66
Neutral
$17.27B17.855.54%3.66%6.63%11.55%
66
Neutral
$2.87B22.5213.77%2.59%8.55%13.57%
60
Neutral
$1.73B16.027.50%1.72%12.40%11.98%
* Utilities Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
WTRG
Essential Utilities
38.64
0.75
1.98%
AWR
American States Water
73.52
-5.80
-7.31%
AWK
American Water
140.70
-0.44
-0.31%
CWT
California Water Service
46.46
-7.12
-13.29%
SBS
Companhia De Saneamento
22.13
4.99
29.11%
HTO
H2O America
49.61
-7.79
-13.57%

Essential Utilities Corporate Events

Business Operations and Strategy
Essential Utilities Invests in Pennsylvania Data Center Project
Positive
Aug 27, 2025

On August 27, 2025, Essential Utilities announced its investment in a 1,400-acre data center project in Greene County, Pennsylvania, through its subsidiary Aqua Infrastructure, LLC. The project will include the construction of an 18 MGD water treatment plant and will be powered by natural gas combined cycle combustion turbines, supplemented by battery storage. Essential’s subsidiary Peoples Natural Gas will provide consulting and energy management services. This initiative aligns with Pennsylvania’s favorable business climate for energy and AI projects and underscores Essential’s commitment to innovation and regional economic development.

Private Placements and Financing
Essential Utilities Issues $500M Senior Notes Offering
Neutral
Aug 7, 2025

On August 7, 2025, Essential Utilities, Inc. issued $500 million in 5.250% Senior Notes due 2035, under an indenture agreement with U.S. Bank Trust Company, National Association. The notes, which will mature on August 15, 2035, were part of a registered public offering and include terms for early redemption and events of default. The offering, closed on the same date, was underwritten by BofA Securities, Wells Fargo Securities, and Huntington Securities, with the company agreeing to indemnify the underwriters against certain liabilities.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 27, 2025