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Essential Utilities (WTRG)
NYSE:WTRG

Essential Utilities (WTRG) AI Stock Analysis

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Essential Utilities

(NYSE:WTRG)

Rating:75Outperform
Price Target:
$43.00
â–²(12.86%Upside)
Essential Utilities receives a solid overall score of 75, driven primarily by its strong financial performance and positive earnings call insights. The company's robust profitability and strategic investments support long-term growth prospects. However, technical indicators suggest short-term caution, and valuation metrics indicate reasonable pricing with a decent dividend yield. The need for further equity issuance and regulatory challenges slightly temper the outlook.
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. (WTRG) is a publicly traded utility company based in the United States, primarily engaged in providing water, wastewater, and natural gas services. Operating through its subsidiaries, the company serves millions of customers across multiple states, with a strong presence in both urban and rural areas. Essential Utilities focuses on delivering reliable, safe, and sustainable utility services, emphasizing infrastructure investment and environmental stewardship.
How the Company Makes MoneyEssential Utilities generates revenue primarily through the provision of regulated water and wastewater services, as well as natural gas distribution. The company's key revenue streams include customer billing for water usage, wastewater treatment services, and natural gas consumption. As a regulated utility, Essential Utilities operates under state-regulated rate structures, which provide a predictable income stream. The company may also engage in infrastructure improvement projects, which can be funded through rate increases approved by regulatory agencies. Additionally, Essential Utilities may form strategic partnerships or pursue acquisitions to expand its service areas and customer base, thereby enhancing its revenue potential.

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:May 12, 2025
(Q1-2025)
|
% Change Since: -5.74%|
Next Earnings Date:Aug 11, 2025
Earnings Call Sentiment Positive
The earnings call presented strong financial performance and operational achievements, with significant revenue growth and strategic infrastructure investments. However, the need for further equity issuance and regulatory challenges in Pennsylvania moderate the positive outlook.
Q1-2025 Updates
Positive Updates
Record Earnings Per Share
Essential Utilities reported strong results with a GAAP earnings per share of $3, marking a 6% increase over the previous year's quarter.
Infrastructure Investment Commitment
Reaffirmed plans to invest between $1.4 billion and $1.5 billion in infrastructure improvements for 2025, with $270.5 million already spent.
Water Quality Compliance
Achieved a water quality compliance rate of 99.8%, meeting state and federal regulations over the past 12 months.
Regulatory Approvals and Adjustments
Positive developments in Texas and Ohio with legislative changes favoring utility operations and rate case timelines.
Revenue Growth
Quarterly revenue increased by 28% from $612.1 million to $783.6 million, driven by regulatory recoveries and higher gas volumes.
Environmental Recognition
Named to USA TODAY's list of climate leaders for the third consecutive year, recognizing the company's commitment to environmental stewardship.
Negative Updates
Equity Issuance Required
Approximately $100 million in equity still needs to be raised to meet 2025 financial requirements, indicating financial pressure.
PFAS Mitigation Costs
Continued high costs related to PFAS mitigation, with $450 million projected to be spent by 2028.
Adverse ALJ Recommendation
Faced a negative recommendation from an administrative law judge in Pennsylvania regarding the acquisition of Beaver Falls, despite a settlement agreement.
Company Guidance
During the Essential Utilities First Quarter 2025 earnings call, the company provided detailed guidance, reaffirming its 2025 earnings per share (EPS) guidance range of $2.07 to $2.11, an increase from last year's $1.97 per share on a non-GAAP basis. The company also highlighted a 6% increase in GAAP earnings per share to $3, compared to the previous year. Essential Utilities plans to invest between $1.4 billion and $1.5 billion in infrastructure improvements in 2025, having already invested $270.5 million by March 31. The company has raised approximately $210 million through its ATM program to support growth and meet credit metrics. Additionally, Essential Utilities maintains high water quality compliance at 99.8% and plans to achieve full compliance with PFOS regulations by 2028, with a targeted capital spend of $450 million. The company also expects approximately $100 million in proceeds from polluter settlements. In terms of financial growth, Essential Utilities aims for a 5% to 7% annual growth rate in earnings per share, supported by consistent dividend growth averaging 7% since 2015.

Essential Utilities Financial Statement Overview

Summary
Essential Utilities demonstrates strong growth and profitability with robust revenue increases and efficient operations. While the balance sheet indicates a healthy equity position, 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.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
2.26B2.09B2.05B2.29B1.88B1.46B
Gross Profit
1.34B1.22B1.13B1.07B987.30M768.34M
EBIT
865.91M757.67M692.10M661.19M602.71M434.69M
EBITDA
1.27B1.25B1.06B1.00B908.35M710.47M
Net Income Common Stockholders
613.33M595.31M498.23M465.24M431.61M284.85M
Balance SheetCash, Cash Equivalents and Short-Term Investments
20.78M9.16M4.61M11.40M10.57M4.83M
Total Assets
18.33B18.46B16.84B15.72B14.66B13.71B
Total Debt
7.78B7.73B7.09B6.84B6.02B5.73B
Net Debt
7.76B7.72B7.08B6.83B6.01B5.72B
Total Liabilities
11.87B11.83B10.95B10.34B9.47B9.02B
Stockholders Equity
6.46B6.20B5.90B5.38B5.18B4.68B
Cash FlowFree Cash Flow
-518.14M-559.40M-265.52M-462.46M-375.84M-327.62M
Operating Cash Flow
829.15M770.34M933.59M600.31M644.68M508.02M
Investing Cash Flow
-1.36B-1.16B-1.22B-1.18B-1.06B-4.33B
Financing Cash Flow
521.12M397.48M281.36M578.83M417.12M1.96B

Essential Utilities Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price38.10
Price Trends
50DMA
39.11
Negative
100DMA
37.89
Positive
200DMA
37.74
Positive
Market Momentum
MACD
-0.35
Positive
RSI
45.50
Neutral
STOCH
57.69
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 38.1 is below the 20-day moving average (MA) of 38.33, below the 50-day MA of 39.11, and above the 200-day MA of 37.74, indicating a neutral trend. The MACD of -0.35 indicates Positive momentum. The RSI at 45.50 is Neutral, neither overbought nor oversold. The STOCH value of 57.69 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 (64)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
AWAWK
77
Outperform
$27.55B25.7210.43%2.34%11.79%11.69%
SBSBS
76
Outperform
$14.10B7.6928.57%2.70%26.64%151.43%
75
Outperform
$10.73B17.179.78%3.40%16.41%5.65%
HTHTO
74
Outperform
$1.86B18.217.49%3.09%12.34%11.78%
AWAWR
69
Neutral
$3.03B24.2713.95%2.37%6.79%5.96%
64
Neutral
$8.54B10.404.24%4.63%4.14%-13.05%
CWCWT
63
Neutral
$2.81B20.698.67%2.51%3.83%-8.75%
* Utilities Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
WTRG
Essential Utilities
38.10
2.38
6.66%
AWR
American States Water
78.27
9.52
13.85%
AWK
American Water
140.61
15.43
12.33%
CWT
California Water Service
46.71
0.11
0.24%
SBS
Companhia De Saneamento
20.84
7.28
53.69%
HTO
H2O America
53.54
2.99
5.91%

Essential Utilities Corporate Events

Executive/Board ChangesShareholder Meetings
Essential Utilities Holds 2025 Annual Shareholders Meeting
Neutral
May 12, 2025

The 2025 Annual Meeting of Shareholders for Essential Utilities, Inc. was held virtually on May 7, 2025. During the meeting, several key decisions were made: the election of directors for one-year terms, the approval of executive compensation for 2024, and the ratification of PricewaterhouseCoopers LLP as the independent registered public accounting firm for the 2025 fiscal year. These decisions reflect the company’s ongoing governance practices and commitment to transparency and accountability in its operations.

The most recent analyst rating on (WTRG) stock is a Buy with a $46.00 price target. To see the full list of analyst forecasts on Essential Utilities stock, see the WTRG Stock Forecast page.

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.