Essential Utilities (WTRG) AI Stock Analysis

• Market Cap: $10.73B
• Dividend Yield: 3.46%
• Average Volume (3M): 2.10M
• Price to Earnings (P/E): 15.7
• Beta (1Y): -0.10
• Revenue Growth: 21.35%
• EPS Growth: 20.96%
• Country: US
• Employees: 3,291
• Sector: Utilities
• Sector Strength: 65
• Industry: Regulated Water
• EPS (TTM): 0.33
• Shares Outstanding: 282,975,520
• 10 Day Avg. Volume: 2,377,243
• 30 Day Avg. Volume: 2,099,605
• PEG Ratio: 1.00
• Price to Book (P/B): 1.60
• Price to Sales (P/S): 4.77
• P/FCF Ratio: -17.78
• Enterprise Value/Market Cap: 1.79
• Enterprise Value/Revenue: 8.07
• Enterprise Value/Gross Profit: 13.54
• Enterprise Value/Ebitda: 14.14
• 1Y Price Target: $42.43
• Price Target Upside: 10.01% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 8
• EPS Forecast (FY): 2.12
• Revenue Forecast (FY): $2.35B

• Rating: 66 Neutral
• Price Target: $40.00 ▲(3.71% Upside)

The overall score reflects strong corporate events and solid financial performance, offset by bearish technical indicators. The merger with American Water Works is a significant positive, but technical weaknesses and cash flow concerns temper the outlook.

Positive Factors

Merger with American Water Works

The merger is expected to enhance operational efficiency, expand customer reach, and support long-term growth targets, providing a durable competitive advantage.

Revenue Growth

Consistent revenue growth indicates stable demand for services and effective market positioning, supporting long-term financial health.

Profitability

Strong profit margins reflect efficient operations and pricing power, contributing to sustainable financial performance over the long term.

Negative Factors

Rising Debt Levels

Elevated debt levels could pose a risk to financial flexibility and increase vulnerability to interest rate changes, impacting long-term stability.

Negative Free Cash Flow

Negative free cash flow suggests challenges in covering capital expenditures and dividends, potentially limiting growth and shareholder returns.

Operational Efficiency Pressure

Declining EBIT margin indicates potential operational inefficiencies, which could affect profitability and competitive positioning if not addressed.

Essential Utilities Business Overview & Revenue Model

Company Description

Essential Utilities, Inc. (WTRG) is a publicly traded utility holding company headquartered in Bryn Mawr, Pennsylvania. The company operates primarily in the water and natural gas sectors, providing essential services to residential, commercial, and industrial customers in multiple states across the United States. Essential Utilities focuses on delivering safe and reliable drinking water and natural gas services, while also investing in sustainable practices and infrastructure improvements to support environmental stewardship and community needs.

How the Company Makes Money

Essential Utilities generates revenue primarily through the provision of water and natural gas services to its customers. The company's revenue model is based on regulated utility rates, which are determined by state Public Utility Commissions (PUCs). These rates allow the company to recover costs associated with providing services, including operational expenses, infrastructure investments, and a reasonable return on equity. Key revenue streams include residential and commercial customer fees, as well as charges for additional services such as maintenance and new connections. Additionally, Essential Utilities may benefit from strategic acquisitions of smaller utility companies, enhancing its customer base and operational efficiencies. The company also focuses on sustainability initiatives, which can lead to potential incentives and grants from government agencies aimed at promoting environmental responsibility.

Essential Utilities Financial Statement Overview

Summary

Essential Utilities demonstrates solid financial performance with strong profitability and revenue growth. The balance sheet is stable, though rising debt levels warrant attention. Cash flow management is a concern, particularly with negative free cash flow, which could impact future financial flexibility.

Income Statement

Essential Utilities shows a strong income statement with consistent revenue growth and solid profit margins. The TTM data indicates a gross profit margin of 59.4% and a net profit margin of 27.6%, both of which are healthy for the industry. Revenue growth has been positive, albeit modest, at 1.78% TTM. The EBIT and EBITDA margins are also robust at 39.98% and 56.74% respectively, indicating efficient operations. However, the slight decline in EBIT margin from the previous year suggests some pressure on operational efficiency.

Balance Sheet

The balance sheet reflects a stable financial position with a debt-to-equity ratio of 1.16, which is manageable but slightly elevated for the industry. Return on equity is decent at 10.1%, showing effective use of equity capital. The equity ratio stands at 36.1%, indicating a balanced capital structure. However, the increase in total debt over the years could pose a risk if not managed carefully.

Cash Flow

Cash flow analysis reveals some challenges, particularly with free cash flow, which is negative and has shown a decline in growth. The operating cash flow to net income ratio is strong at 1.53, indicating good cash generation relative to net income. However, the negative free cash flow to net income ratio of -0.52 highlights potential issues in covering capital expenditures and dividends from operating cash flows.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	2.38B	2.09B	2.05B	2.29B	1.88B	1.46B
Gross Profit	1.42B	1.22B	1.13B	1.07B	987.30M	768.34M
EBITDA	1.36B	1.25B	1.06B	1.01B	927.66M	710.47M
Net Income	668.45M	595.31M	498.23M	465.24M	431.61M	284.85M
Balance Sheet
Total Assets	18.89B	18.03B	16.84B	15.72B	14.66B	13.71B
Cash, Cash Equivalents and Short-Term Investments	6.40M	9.16M	4.61M	11.40M	10.57M	4.83M
Total Debt	7.95B	7.73B	7.09B	6.84B	6.02B	5.73B
Total Liabilities	12.08B	11.83B	10.95B	10.34B	9.47B	9.02B
Stockholders Equity	6.82B	6.20B	5.90B	5.38B	5.18B	4.68B
Cash Flow
Free Cash Flow	-464.63M	-559.40M	-265.52M	-462.46M	-375.84M	-327.62M
Operating Cash Flow	952.18M	770.34M	933.59M	600.31M	644.68M	508.02M
Investing Cash Flow	-1.46B	-1.16B	-1.22B	-1.18B	-1.06B	-4.33B
Financing Cash Flow	504.94M	397.48M	281.36M	578.83M	417.12M	1.96B

Essential Utilities Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 38.57
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WTRG, the sentiment is Positive. The current price of 38.57 is above the 20-day moving average (MA) of 38.48, below the 50-day MA of 39.20, and above the 200-day MA of 38.29, indicating a neutral trend. The MACD of -0.22 indicates Negative momentum. The RSI at 49.94 is Neutral, neither overbought nor oversold. The STOCH value of 63.74 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for WTRG.

Essential Utilities Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AWK	73 Outperform	$25.41B	22.84	10.46%	2.51%	12.29%	13.13%
SBS	71 Outperform	$16.67B	13.18	16.99%	2.22%	-10.23%	-26.87%
AWR	70 Outperform	$2.83B	21.65	13.73%	2.63%	10.28%	13.56%
WTRG	66 Neutral	$10.73B	15.73	10.29%	3.46%	21.35%	20.96%
Sector *	66 Neutral	$17.65B	18.10	5.60%	3.62%	6.62%	11.55%
CWT	65 Neutral	$2.56B	18.74	8.19%	2.87%	-2.60%	-33.78%
MSEX	55 Neutral	$948.07M	21.70	9.27%	2.67%	6.24%	3.35%

Essential Utilities Corporate Events

Essential Utilities Merges with American Water Works

On October 26, 2025, Essential Utilities, Inc. and American Water Works Company, Inc. entered into an Agreement and Plan of Merger, with Essential becoming a wholly owned subsidiary of American Water. The merger, unanimously approved by both companies’ boards, aims to create a leading U.S. water and wastewater utility with a combined market capitalization of approximately $40 billion. This strategic move is expected to enhance operational efficiency, expand customer reach, and provide long-term growth opportunities for employees while maintaining commitments to community support and water affordability. The merger is also anticipated to be accretive to American Water’s earnings per share in the first year post-transaction, supporting long-term growth targets for earnings and dividends.