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1. Company Snapshot

1.a. 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.

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1.b. Last Insights on WTRG

Essential Utilities' recent performance was driven by a series of positive developments. The company's Q4 earnings and revenues beat estimates, with net income increasing 34% year-over-year to $184.8 million or $0.67 per share. This growth was fueled by a strong capital improvement program, which is modernizing water and natural gas infrastructure across its nine-state footprint. Additionally, the company's commitment to addressing infrastructure challenges is reflected in its billion-dollar capital improvement program. Furthermore, Essential Utilities has been recognized for its efforts to strengthen America's infrastructure, with a recent announcement highlighting its commitment to addressing infrastructure challenges. The company's focus on PFAS mitigation and a $7.8 billion capital investment plan position it for long-term growth and regulatory compliance.

1.c. Company Highlights

2. Essential Utilities Beats Q2 Expectations with Strong Revenue Growth

Essential Utilities reported a robust Q2 2025, with GAAP earnings per share (EPS) of $0.38, representing a 35.7% increase year-over-year, surpassing analyst estimates of $0.29. Revenues rose 18.5% driven by favorable rate case outcomes, higher purchased gas costs, and increased gas volumes. The company's water and gas businesses performed well, with the gas business contributing net income of $17.5 million. Operating and maintenance (O&M) expenses increased 4.2% year-over-year, primarily due to employee-related costs, bad debt expense, and legal expenses. As Daniel J. Schuller noted, the revenue growth was partially offset by higher O&M, depreciation, interest, and taxes.

Publication Date: Aug -07

📋 Highlights
  • GAAP Earnings Growth: Delivered a 35% increase in GAAP earnings per share of $0.38 for Q2 2025.
  • Revenue Growth: Revenues rose 18.5% year-over-year, driven by favorable rate cases and higher gas volumes.
  • Capital Investments: Deployed $613 million in infrastructure improvements, targeting $1.4 billion for 2025.
  • Dividend Increase: Approved a 5.25% dividend increase, reflecting strong financial performance.
  • Rate Base Growth: Projected combined utility rate base CAGR of 8%, with water growing 6% and gas 11% annually.

Business Segment Performance

The company's Water Division, Aqua, has a strong track record of operational excellence, serving over 1 million customers across eight states with a rate base of over $7 billion. Aqua is expected to achieve annual rate base growth of 6% through 2029. The Regulated Natural Gas segment is also expected to grow, with an 11% compounded annual growth rate in rate base. The company is committed to remediating PFAS, with over 50 sites mitigated and another 50 under construction.

Growth Strategy and Outlook

Essential Utilities is reaffirming its capital investment plans, targeting approximately $1.4 billion in infrastructure investment for 2025, with $613 million deployed as of June 30. The company has a strong acquisition strategy, having spent $58 million on acquiring systems serving approximately 10,300 customers in 2025. The combined utility rate base is expected to grow at a compounded annual growth rate of about 8%, driving earnings per share growth. The company expects GAAP EPS to exceed $2.11, above the guidance range of $2.07 to $2.11.

Valuation and Dividend

With a P/E Ratio of 16.45 and a Dividend Yield of 3.43%, Essential Utilities offers a relatively attractive valuation. The company's ROE is 10.11%, and ROIC is 6.99%, indicating a decent return on equity. The Board of Directors approved a 5.25% increase in the dividend, demonstrating the company's commitment to delivering consistent dividend growth. The payout ratio is expected to be between 60% and 65%. Analysts estimate next year's revenue growth at 5.5%.

3. NewsRoom

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Essential Utilities Named to Newsweek's List of America's Most Responsible Companies for Fifth Straight Year

Dec -03

Source: businesswire.com

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Top 10 High-Yield Dividend Stocks For December 2025

Dec -01

Source: seekingalpha.com

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Rep. Lisa C. McClain Sells Off Shares of Essential Utilities Inc. (NYSE:WTRG)

Nov -27

Source: defenseworld.net

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3 Stocks to Watch From the Thriving Water Supply Industry

Nov -24

Source: zacks.com

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Halper Sadeh LLC Encourages THS, CDTX, SPNS Shareholders to Contact the Firm to Discuss Their Rights

Nov -22

Source: globenewswire.com

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Aqua Indiana Breaks Ground on Historic Midwest Wastewater Treatment Plant Expansion Project in Fort Wayne

Nov -17

Source: businesswire.com

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Essential Utilities Inc. $WTRG Shares Bought by Allworth Financial LP

Nov -12

Source: defenseworld.net

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Bank of Montreal Can Has $5.46 Million Holdings in Essential Utilities Inc. $WTRG

Nov -11

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.90%)

6. Segments

Regulated Water

Expected Growth: 8.5%

Regulated Water segment of Essential Utilities, Inc. growth driven by increasing demand for water infrastructure, rate base growth through capital investments, and acquisitions. Additionally, the company's focus on water conservation and efficiency initiatives, as well as its strong customer base, contribute to its 8.5% growth.

Regulated Natural Gas

Expected Growth: 9.5%

Essential Utilities' Regulated Natural Gas segment growth is driven by increasing demand for clean energy, infrastructure investments, and rate base growth. Additionally, strategic acquisitions, favorable regulatory environments, and a strong customer base contribute to the 9.5% growth rate.

Other and Eliminations

Expected Growth: 7.5%

Essential Utilities' Other and Eliminations segment growth of 7.5% is driven by increased water and wastewater management services, strategic acquisitions, and cost savings initiatives. Additionally, the company's focus on infrastructure investments, rate base growth, and operational efficiencies contribute to the segment's expansion.

7. Detailed Products

Water Services

Essential Utilities, Inc. provides water services to residential, commercial, and industrial customers through its subsidiaries, including Aqua Pennsylvania, Aqua Ohio, and Aqua Texas.

Wastewater Services

The company offers wastewater services, including wastewater collection, treatment, and disposal, to protect public health and the environment.

Natural Gas Distribution

Essential Utilities, Inc. distributes natural gas to residential, commercial, and industrial customers through its subsidiaries, including Peoples Gas and PGW.

Electricity Distribution

The company distributes electricity to residential, commercial, and industrial customers through its subsidiaries, including PECO.

Infrastructure and Construction Services

Essential Utilities, Inc. offers infrastructure and construction services, including pipeline construction, maintenance, and repair.

8. Essential Utilities, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Essential Utilities, Inc. is moderate due to the availability of alternative energy sources and water supply options.

Bargaining Power Of Customers

The bargaining power of customers is low due to the essential nature of the services provided by Essential Utilities, Inc., making it difficult for customers to negotiate prices or switch to alternative providers.

Bargaining Power Of Suppliers

The bargaining power of suppliers is moderate due to the presence of multiple suppliers of materials and services, but the company's large scale of operations gives it some negotiating power.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the utility industry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several established players in the utility industry, leading to intense competition for market share and customers.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 54.47%
Debt Cost 3.95%
Equity Weight 45.53%
Equity Cost 7.90%
WACC 5.75%
Leverage 119.63%

11. Quality Control: Essential Utilities, Inc. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Otter Tail

A-Score: 6.6/10

Value: 5.3

Growth: 7.0

Quality: 6.5

Yield: 6.0

Momentum: 6.0

Volatility: 8.7

1-Year Total Return ->

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Entergy

A-Score: 6.5/10

Value: 4.8

Growth: 3.6

Quality: 4.7

Yield: 7.0

Momentum: 9.0

Volatility: 10.0

1-Year Total Return ->

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ALLETE

A-Score: 6.4/10

Value: 5.9

Growth: 4.0

Quality: 4.3

Yield: 8.0

Momentum: 6.0

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
Essential Utilities

A-Score: 6.0/10

Value: 5.3

Growth: 5.6

Quality: 5.4

Yield: 6.0

Momentum: 4.0

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
California Water Service

A-Score: 5.8/10

Value: 6.2

Growth: 5.4

Quality: 6.6

Yield: 5.0

Momentum: 2.5

Volatility: 9.0

1-Year Total Return ->

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Stock-Card
American States Water

A-Score: 5.4/10

Value: 4.6

Growth: 5.2

Quality: 5.7

Yield: 5.0

Momentum: 2.0

Volatility: 10.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

38.0$

Current Price

38$

Potential

-0.00%

Expected Cash-Flows