Essential Utilities (WTRG) AI Stock Analysis

• Market Cap: $11.37B
• Dividend Yield: 3.48%
• Average Volume (3M): 2.86M
• Price to Earnings (P/E): 18.2
• Beta (1Y): -0.11
• Revenue Growth: 21.35%
• EPS Growth: 20.96%
• Country: US
• Employees: 3,291
• Sector: Utilities
• Sector Strength: 65
• Industry: Regulated Water
• EPS (TTM): 0.47
• Shares Outstanding: 283,117,830
• 10 Day Avg. Volume: 4,678,274
• 30 Day Avg. Volume: 2,862,946
• PEG Ratio: 12.61
• Price to Book (P/B): 1.57
• Price to Sales (P/S): 4.34
• P/FCF Ratio: -25.61
• Enterprise Value/Market Cap: 1.73
• Enterprise Value/Revenue: 7.94
• Enterprise Value/Gross Profit: 14.85
• Enterprise Value/Ebitda: 14.38
• 1Y Price Target: $38.00
• Price Target Upside: -5.35% Downside
• Rating Consensus: Moderate Sell
• Number of Analyst Covering: 1
• EPS Forecast (FY): 2.27
• Revenue Forecast (FY): $2.40B

• Rating: 69 Neutral
• Price Target: $44.00 ▲(9.59% Upside)
• Action: Reiterated Date: 02/27/26
• Date: Action: Reiterated 02/27/26

The score is driven primarily by steady regulated-utility earnings and constructive earnings-call outlook (reaffirmed 5%–7% EPS growth and EPS beat), offset by structurally negative free cash flow and data/comparability uncertainty in 2025 financial line items. Technicals are supportive with price above major moving averages, while valuation is reasonable with a mid-teens P/E and a ~3.4% dividend yield.

Positive Factors

Regulatory-driven revenue stability

Material regulatory recoveries and rate mechanisms (≈$101.5M incremental annualized in 2025) create structurally predictable, contract-like revenue streams. That cost-recovery framework supports steady cash flows and enables sustained investments and earnings visibility over multi-year regulatory cycles.

Large, sustained infrastructure investment program

Record and increasing capital investment ($1.4B in 2025; $1.7B planned in 2026) modernizes assets and grows the regulated rate base. Over time this reduces service risk, supports future rate-base growth and authorized returns, and underpins durable regulated earnings generation.

Disciplined cash returns and credibility on targets

A long dividend track record and explicit payout guidance (60%–65% payout ratio, recent 5.25% hike) combined with management's 5%–7% EPS CAGR target and FFO-to-debt focus indicate disciplined capital allocation and commitment to credit metrics, reinforcing investor confidence and financial stability.

Negative Factors

Persistent negative free cash flow

Even with positive operating cash flow, recurring negative free cash flow shows capex and investments exceed internal cash generation. Over the medium term this necessitates external financing or higher leverage, constraining flexibility and raising execution risk during rate or funding stress periods.

Material leverage and reporting inconsistency

Historic debt-to-equity near or above 1x is typical but elevates refinancing and rate-sensitivity risk. The 2025 anomaly (total debt reported as zero) introduces transparency and comparability concerns, complicating credit assessment and planning for capital markets access.

Regulatory and transaction timing risk

Key growth and integration initiatives face legal and regulatory delays: DELCORA is stayed by bankruptcy proceedings and the American Water merger, though shareholder-approved, still needs antitrust and state PUC approvals. Such timing uncertainty can defer synergies, cash benefits and regulatory recoveries.

Essential Utilities Business Overview & Revenue Model

Company Description

Essential 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 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

Solid regulated-utility profitability and positive operating cash flow, but persistently negative free cash flow implies ongoing external funding needs. Several 2025 line-item inconsistencies (e.g., margins and reported debt vs. prior years) reduce confidence in comparability and temper the score.

Income Statement

Revenue has expanded over time (2020–2025) and re-accelerated in 2025 (up ~4% vs. 2024), following a dip in 2023. Profitability is solid for a regulated utility, with net profit margins generally in the low-to-high 20% range (about 25% in 2025 and ~29% in 2024). A key weakness is inconsistency and data quality in 2025 margins (gross profit and EBIT margin shown as zero despite strong EBITDA and net income), which reduces confidence in trend-read accuracy and suggests earnings comparability issues year-to-year.

Balance Sheet

The balance sheet shows meaningful leverage in the historical years, with debt running above equity in 2020–2024 (debt-to-equity roughly ~1.16–1.27), which is common in regulated utilities but still adds refinancing and rate-sensitivity risk. Returns on equity are steady and respectable (generally ~8–10%). However, 2025 reports total debt as zero while prior years show ~$6–8B of debt, indicating either a major structural change or a data inconsistency; that uncertainty tempers the score despite otherwise stable equity and asset base.

Cash Flow

Operating cash flow is consistently positive and improved in 2025 versus 2024. The main concern is persistently negative free cash flow across all years shown, indicating ongoing heavy capital investment and/or funding needs beyond internally generated cash. Cash conversion is mixed: in some years operating cash flow covered net income well (notably 2025), while other years were weaker (e.g., 2022 and 2024), reinforcing that cash generation can fluctuate even when reported earnings are stable.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	2.47B	2.09B	2.05B	2.29B	1.88B
Gross Profit	1.01B	1.22B	1.13B	1.07B	987.30M
EBITDA	1.37B	1.25B	1.06B	1.01B	927.66M
Net Income	616.37M	595.31M	498.23M	465.24M	431.61M
Balance Sheet
Total Assets	19.46B	18.03B	16.84B	15.72B	14.66B
Cash, Cash Equivalents and Short-Term Investments	2.51M	9.16M	4.61M	11.40M	10.57M
Total Debt	8.28B	7.73B	7.09B	6.84B	6.02B
Total Liabilities	12.61B	11.83B	10.95B	10.34B	9.47B
Stockholders Equity	6.86B	6.20B	5.90B	5.38B	5.18B
Cash Flow
Free Cash Flow	-419.52M	-559.40M	-265.52M	-462.46M	-375.84M
Operating Cash Flow	1.01B	770.34M	933.59M	600.31M	644.68M
Investing Cash Flow	-1.51B	-1.16B	-1.22B	-1.18B	-1.06B
Financing Cash Flow	525.91M	397.48M	281.36M	578.83M	417.12M

Essential Utilities Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 40.15
• 50DMA: Positive
• 100DMA: Positive
• 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 40.15 is above the 20-day moving average (MA) of 38.62, above the 50-day MA of 38.52, and above the 200-day MA of 38.00, indicating a bullish trend. The MACD of 0.46 indicates Negative momentum. The RSI at 62.40 is Neutral, neither overbought nor oversold. The STOCH value of 71.47 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
SBS	71 Outperform	$20.81B	17.09	16.98%	2.22%	-10.23%	-26.87%
WTRG	69 Neutral	$11.37B	18.20	9.44%	3.48%	21.35%	20.96%
AWK	67 Neutral	$26.44B	23.88	10.50%	2.51%	12.29%	13.13%
MSEX	67 Neutral	$1.01B	22.91	9.09%	2.67%	6.24%	3.35%
Sector *	66 Neutral	$17.65B	18.10	5.60%	3.62%	6.62%	11.55%
AWR	62 Neutral	$2.92B	22.14	13.22%	2.64%	10.28%	13.56%
CWT	61 Neutral	$2.71B	20.97	7.71%	2.88%	-2.60%	-33.78%

Essential Utilities Corporate Events

Essential Utilities Shareholders Approve Transformative American Water Merger

On February 10, 2026, Essential Utilities held a special shareholder meeting at which 76.2% of outstanding shares were represented, and investors decisively approved the merger agreement with American Water Works Company, Inc. Shareholders also backed, on a non-binding basis, the proposed executive compensation tied to the deal, while a contingency proposal to adjourn the meeting was not needed due to the strong support for the transaction.

A joint announcement the same day confirmed that shareholders of both Essential Utilities and American Water overwhelmingly endorsed their merger-related proposals, with nearly 95% of Essential’s votes cast in favor of the deal. The merger, which aims to combine two of the largest regulated water and wastewater utilities in the U.S., still requires antitrust clearance and approvals from public utility commissions, leaving regulatory outcomes as the key remaining hurdle before an expected closing by the end of the first quarter of 2027.

The most recent analyst rating on (WTRG) stock is a Sell with a $38.00 price target. To see the full list of analyst forecasts on Essential Utilities stock, see the WTRG Stock Forecast page.

Essential Utilities Shareholders Approve Merger with American Water

On February 10, 2026, shareholders of American Water Works Company, Inc. and Essential Utilities, Inc. approved proposals related to their planned merger, based on preliminary voting results from respective special meetings. The shareholder approvals mark a key milestone toward combining the two regulated water utilities, signaling potential consolidation in the U.S. water services sector and setting the stage for further integration steps once final voting results are confirmed.

Essential Utilities plans to file a Current Report on Form 8-K within four business days following its special meeting to disclose the final shareholder vote outcomes. The merger, governed by an Agreement and Plan of Merger signed on October 26, 2025, positions the combined entity to potentially expand scale and operational reach in regulated water and wastewater services, with implications for customers, investors, and regulators across its service territories.

The most recent analyst rating on (WTRG) stock is a Sell with a $38.00 price target. To see the full list of analyst forecasts on Essential Utilities stock, see the WTRG Stock Forecast page.