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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. Strong 2025 Financial Performance with Revenue Growth and EPS Beat

The company reported a robust financial performance in 2025, with revenues increasing by 18.6% to $2.5 billion, driven by regulatory recoveries and other factors. GAAP EPS came in at $2.20, exceeding the guidance range of $2.07 to $2.11. The actual EPS beat is a notable achievement, as seen in the quarterly EPS of $0.47 relative to estimates at $0.36. The company's ability to deliver strong earnings was also reflected in its operating performance, with O&M expenses increasing by only 0.9% year-over-year, despite the revenue growth.

Publication Date: Mar -01

📋 Highlights
  • Merge Progress & Regulatory Filings: Shareholder approval achieved rapidly; seven state filings completed by 2025, with merger expected to close in 2027.
  • Financial Outperformance: 2025 EPS of $2.20 exceeded guidance ($2.07–$2.11), with a 5.25% dividend increase and $1.4B invested in regulated infrastructure.
  • Revenue Growth & Regulatory Recoveries: Revenue rose 18.6% to $2.5B, including $177.6M from regulatory recoveries, with O&M expenses up 0.9% year-over-year.
  • Acquisitions & Customer Expansion: Three water/wastewater acquisitions for $58M added >12,700 customers, with three more pending in 2026 for Pennsylvania and Texas systems.

Operational Highlights and Infrastructure Investments

The company continued to invest in its infrastructure, with a record $1.4 billion invested in regulated infrastructure in 2025, improving reliability and resiliency for its communities. The water business added more municipal wastewater systems in Pennsylvania and North Carolina, and replaced or retired over 400 miles of main in 2025. As Christopher H. Franklin noted, "We've invested a record $1.4 billion in regulated infrastructure, improving reliability and resiliency for our communities." The company is expecting to invest $1.7 billion in regulated infrastructure in 2026, indicating a continued focus on growth and improvement.

Growth Prospects and Guidance

The company is reaffirming its 5% to 7% multiyear earnings per share guidance, excluding DELCORA, and is committed to maintaining a strong balance sheet and delivering consistent dividend growth. With a payout ratio between 60-65%, the company's dividend yield stands at 3.39%. Analysts estimate next year's revenue growth at 6.7%, indicating a continued growth trajectory.

Valuation Metrics

The company's valuation metrics indicate a reasonable valuation, with a P/E Ratio of 18.35 and a P/B Ratio of 1.65. The Dividend Yield of 3.39% is also attractive, given the company's commitment to consistent dividend growth. However, the Net Debt / EBITDA ratio of 6.06 may be a concern, indicating a relatively high level of debt. The EV/EBITDA ratio of 14.34 is also worth monitoring, as it may impact the company's ability to generate cash flow.

3. NewsRoom

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WTRG's Investments, Rates and Strategic Acquisition Drive Growth

Mar -30

Source: zacks.com

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Aristotle Capital Boston LLC Makes New Investment in Essential Utilities Inc. $WTRG

Mar -16

Source: defenseworld.net

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Essential Utilities Honored Among America's Most Charitable Companies 2026 by Newsweek; Announces Nearly $7.2 Million Community Giving in 2025

Mar -11

Source: businesswire.com

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Essential Utilities Unit Buys Greenville Municipal Water for $18M

Mar -06

Source: zacks.com

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Aqua Pennsylvania Acquires Greenville Municipal Water Authority in Mercer County

Mar -04

Source: businesswire.com

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Top 10 High-Yield Dividend Stocks For March 2026

Mar -01

Source: seekingalpha.com

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Essential Utilities Q4 Earnings Beat Estimates, Revenues Rise Y/Y

Feb -26

Source: zacks.com

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WTRG Reports Earnings

Feb -26

Source: fool.com

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: 6.7/10

Value: 5.1

Growth: 7.0

Quality: 6.5

Yield: 6.0

Momentum: 7.0

Volatility: 8.7

1-Year Total Return ->

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Entergy

A-Score: 6.5/10

Value: 5.3

Growth: 3.4

Quality: 4.7

Yield: 7.0

Momentum: 8.5

Volatility: 10.0

1-Year Total Return ->

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ALLETE

A-Score: 6.5/10

Value: 5.7

Growth: 3.9

Quality: 4.4

Yield: 8.0

Momentum: 7.0

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
Essential Utilities

A-Score: 6.1/10

Value: 5.4

Growth: 5.6

Quality: 5.4

Yield: 6.0

Momentum: 5.0

Volatility: 9.3

1-Year Total Return ->

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Stock-Card
American States Water

A-Score: 5.7/10

Value: 4.7

Growth: 5.2

Quality: 5.9

Yield: 5.0

Momentum: 3.5

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
California Water Service

A-Score: 5.5/10

Value: 5.1

Growth: 5.3

Quality: 5.1

Yield: 5.0

Momentum: 3.5

Volatility: 9.0

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

41.08$

Current Price

41.08$

Potential

-0.00%

Expected Cash-Flows