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Essential Utilities (WTRG) Down 1.1% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Essential Utilities (WTRG - Free Report) . Shares have lost about 1.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Essential Utilities due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Essential Utilities Beats Q3 Earnings Estimates, Plans to Invest $8B
Essential Utilities Inc. delivered third-quarter 2024 operating earnings per share (EPS) of 25 cents, which beat the Zacks Consensus Estimate of 23 cents by 8.7%.
However, the bottom line declined 16.7% from the year-ago quarter’s earnings of 30 cents. The year-over-year decline in earnings was due to the impact of lower regulated natural gas volumes, higher depreciation and interest expense, and lower repair tax benefits.
Total Revenues of WTRG
Operating revenues of $435 million surpassed the Zacks Consensus Estimate of $420 million by 3.8%. Total revenues were up 5.8% year over year.
Highlights of WTRG’s Q3 Release
Operation and maintenance expenses were $144.4 million, down 1.8% from the year-ago figure of $147 million. This was due to a decrease in bad debt expense and a lower expense compared with the prior year for the sale of the West Virginia gas utility and energy plant assets.
Operating income was $155.1 million, up 12.9% year over year. Interest expenses increased 11.9% to $76.9 million from $68.6 million in the prior-year quarter.
Essential Utilities signed seven purchase agreements to acquire additional wastewater systems, which will add 213,000 retail customers or equivalent dwelling units. The pending deal includes the recently announced agreement with Integra Water LLC to acquire the wastewater system in Los Milagros, TX.
So far in 2024, the company’s regulated water segment has received rate awards or infrastructure surcharges of $51 million in Illinois, North Carolina, New Jersey, Texas, Virginia, Ohio and Pennsylvania. Its regulated natural gas segment has received infrastructure surcharges of $21.8 million in Kentucky and Pennsylvania.
WTRG’s Financial Highlights
Current assets were $373.9 million as of Sept. 30, 2024, compared with $492 million as of Dec. 31, 2023.
Long-term debt was $7.23 billion as of Sept. 30, 2024, higher than $6.82 billion as of Dec. 31, 2023.
The company invested $932.5 million in the first nine months of the year to improve its regulated water and natural gas infrastructure systems and to enhance operations and customer service.
Guidance of WTRG
Essential Utilities reaffirmed the 2024 EPS guidance range of $1.96-$2. The Zacks Consensus Estimate for EPS is pegged at $1.99.
Essential Utilities expects its 2025 EPS to be between $2.05 and $2.11. The Zacks Consensus Estimate for EPS is pegged at $2.12.
Management anticipates its customer base in the water segment to expand by 2-3% through acquisitions and organic customer growth.
The company plans to invest $1.4-$1.5 billion in its infrastructure in 2025. Essential Utilities also plans to invest $8 billion through 2025-2029 to improve the water and natural gas systems and better serve its customers using improved information technology.
WTRG plans to grow long-term earnings per share at a compounded annual growth rate of 5% to 7% for the three-year period through 2027.
How Have Estimates Been Moving Since Then?
Estimates revision followed an upward path over the past two months.
The consensus estimate has shifted 9.6% due to these changes.
VGM Scores
Currently, Essential Utilities has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Essential Utilities has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Essential Utilities (WTRG) Down 1.1% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Essential Utilities (WTRG - Free Report) . Shares have lost about 1.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Essential Utilities due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Essential Utilities Beats Q3 Earnings Estimates, Plans to Invest $8B
Essential Utilities Inc. delivered third-quarter 2024 operating earnings per share (EPS) of 25 cents, which beat the Zacks Consensus Estimate of 23 cents by 8.7%.
However, the bottom line declined 16.7% from the year-ago quarter’s earnings of 30 cents. The year-over-year decline in earnings was due to the impact of lower regulated natural gas volumes, higher depreciation and interest expense, and lower repair tax benefits.
Total Revenues of WTRG
Operating revenues of $435 million surpassed the Zacks Consensus Estimate of $420 million by 3.8%. Total revenues were up 5.8% year over year.
Highlights of WTRG’s Q3 Release
Operation and maintenance expenses were $144.4 million, down 1.8% from the year-ago figure of $147 million. This was due to a decrease in bad debt expense and a lower expense compared with the prior year for the sale of the West Virginia gas utility and energy plant assets.
Operating income was $155.1 million, up 12.9% year over year. Interest expenses increased 11.9% to $76.9 million from $68.6 million in the prior-year quarter.
Essential Utilities signed seven purchase agreements to acquire additional wastewater systems, which will add 213,000 retail customers or equivalent dwelling units. The pending deal includes the recently announced agreement with Integra Water LLC to acquire the wastewater system in Los Milagros, TX.
So far in 2024, the company’s regulated water segment has received rate awards or infrastructure surcharges of $51 million in Illinois, North Carolina, New Jersey, Texas, Virginia, Ohio and Pennsylvania. Its regulated natural gas segment has received infrastructure surcharges of $21.8 million in Kentucky and Pennsylvania.
WTRG’s Financial Highlights
Current assets were $373.9 million as of Sept. 30, 2024, compared with $492 million as of Dec. 31, 2023.
Long-term debt was $7.23 billion as of Sept. 30, 2024, higher than $6.82 billion as of Dec. 31, 2023.
The company invested $932.5 million in the first nine months of the year to improve its regulated water and natural gas infrastructure systems and to enhance operations and customer service.
Guidance of WTRG
Essential Utilities reaffirmed the 2024 EPS guidance range of $1.96-$2. The Zacks Consensus Estimate for EPS is pegged at $1.99.
Essential Utilities expects its 2025 EPS to be between $2.05 and $2.11. The Zacks Consensus Estimate for EPS is pegged at $2.12.
Management anticipates its customer base in the water segment to expand by 2-3% through acquisitions and organic customer growth.
The company plans to invest $1.4-$1.5 billion in its infrastructure in 2025. Essential Utilities also plans to invest $8 billion through 2025-2029 to improve the water and natural gas systems and better serve its customers using improved information technology.
WTRG plans to grow long-term earnings per share at a compounded annual growth rate of 5% to 7% for the three-year period through 2027.
How Have Estimates Been Moving Since Then?
Estimates revision followed an upward path over the past two months.
The consensus estimate has shifted 9.6% due to these changes.
VGM Scores
Currently, Essential Utilities has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Essential Utilities has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.