NYSE:WTRG

Stock Analysis Report

Executive Summary

Essential Utilities, Inc., through its subsidiaries, operates regulated utilities that provide water or wastewater services in the United States.

Rewards

Earnings are forecast to grow 30.08% per year

Earnings grew by 17% over the past year

Pays a high and reliable dividend of 2.32%

Risk Analysis

Interest payments are not well covered by earnings

Highly volatile share price over past 3 months

Significant insider selling over the past 3 months

Shareholders have been diluted in the past year



Snowflake Analysis

High growth potential established dividend payer.


Similar Companies

Share Price & News

How has Essential Utilities's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: WTRG's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

15.8%

WTRG

12.5%

US Water Utilities

9.9%

US Market


1 Year Return

10.9%

WTRG

11.0%

US Water Utilities

-11.9%

US Market

Return vs Industry: WTRG matched the US Water Utilities industry which returned 11% over the past year.

Return vs Market: WTRG exceeded the US Market which returned -11.9% over the past year.


Shareholder returns

WTRGIndustryMarket
7 Day15.8%12.5%9.9%
30 Day-6.0%-3.5%-15.0%
90 Day-14.1%-7.0%-21.5%
1 Year13.3%10.9%12.9%11.0%-10.0%-11.9%
3 Year34.8%25.7%52.9%44.1%12.3%5.1%
5 Year70.3%51.3%114.4%92.7%32.5%18.1%

Price Volatility Vs. Market

How volatile is Essential Utilities's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Essential Utilities undervalued compared to its fair value and its price relative to the market?

38.8x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: WTRG ($40.42) is trading above our estimate of fair value ($23.32)

Significantly Below Fair Value: WTRG is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: WTRG is poor value based on its PE Ratio (38.8x) compared to the Water Utilities industry average (35.3x).

PE vs Market: WTRG is poor value based on its PE Ratio (38.8x) compared to the US market (13x).


Price to Earnings Growth Ratio

PEG Ratio: WTRG is poor value based on its PEG Ratio (1.3x)


Price to Book Ratio

PB vs Industry: WTRG is good value based on its PB Ratio (2.3x) compared to the US Water Utilities industry average (2.6x).


Next Steps

Future Growth

How is Essential Utilities forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

30.1%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: WTRG's forecast earnings growth (30.1% per year) is above the savings rate (1.7%).

Earnings vs Market: WTRG's earnings (30.1% per year) are forecast to grow faster than the US market (12.3% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: WTRG's revenue (36.9% per year) is forecast to grow faster than the US market (7.3% per year).

High Growth Revenue: WTRG's revenue (36.9% per year) is forecast to grow faster than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: WTRG's Return on Equity is forecast to be low in 3 years time (8.5%).


Next Steps

Past Performance

How has Essential Utilities performed over the past 5 years?

-2.7%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: WTRG has high quality earnings.

Growing Profit Margin: WTRG's current net profit margins (25.2%) are higher than last year (22.9%).


Past Earnings Growth Analysis

Earnings Trend: WTRG's earnings have declined by -2.7% per year over the past 5 years.

Accelerating Growth: WTRG's earnings growth over the past year (17%) exceeds its 5-year average (-2.7% per year).

Earnings vs Industry: WTRG earnings growth over the past year (17%) exceeded the Water Utilities industry 4.5%.


Return on Equity

High ROE: WTRG's Return on Equity (5.8%) is considered low.


Next Steps

Financial Health

How is Essential Utilities's financial position?


Financial Position Analysis

Short Term Liabilities: WTRG's short term assets ($2.0B) exceed its short term liabilities ($318.8M).

Long Term Liabilities: WTRG's short term assets ($2.0B) do not cover its long term liabilities ($5.2B).


Debt to Equity History and Analysis

Debt Level: WTRG's debt to equity ratio (79.5%) is considered high.

Reducing Debt: WTRG's debt to equity ratio has reduced from 98.9% to 79.5% over the past 5 years.

Debt Coverage: WTRG's debt is not well covered by operating cash flow (11%).

Interest Coverage: WTRG's interest payments on its debt are not well covered by EBIT (2.9x coverage).


Balance Sheet

Inventory Level: WTRG has a high level of physical assets or inventory.

Debt Coverage by Assets: WTRG's debt is not covered by short term assets (assets are 0.7x debt).


Next Steps

Dividend

What is Essential Utilities's current dividend yield, its reliability and sustainability?

2.32%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: WTRG's dividend (2.32%) is higher than the bottom 25% of dividend payers in the US market (1.98%).

High Dividend: WTRG's dividend (2.32%) is low compared to the top 25% of dividend payers in the US market (5.49%).


Stability and Growth of Payments

Stable Dividend: WTRG's dividends per share have been stable in the past 10 years.

Growing Dividend: WTRG's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: At its current payout ratio (87%), WTRG's payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: WTRG's dividends in 3 years are forecast to be covered by earnings (65% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

4.0yrs

Average management tenure


CEO

Chris Franklin (54yo)

4.67s

Tenure

US$3,552,705

Compensation

Mr. Christopher H. Franklin, also known as Chris, has been Chief Executive Officer and President at at Essential Utilities Inc. since July 1, 2015 and its Chairman since January 1, 2018. He has been a Dire ...


CEO Compensation Analysis

Compensation vs Market: Chris's total compensation ($USD3.55M) is below average for companies of similar size in the US market ($USD11.74M).

Compensation vs Earnings: Chris's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Christopher Franklin
Chairman4.67yrsUS$3.55m0.066% $6.5m
Daniel Schuller
Executive VP & CFO1.42yrsUS$1.20m0.0098% $972.6k
Richard Fox
Executive VP & COO4.67yrsUS$1.27m0.012% $1.2m
Christopher Luning
Executive VP7.92yrsUS$878.96k0.016% $1.6m
Matthew Rhodes
Executive Vice President of Strategy & Corporate Development1.75yrsUS$1.32m0.0040% $399.1k
Robert Rubin
Senior VP16yrsno data0.036% $3.6m
Whitney Kellett
Chief Information Officer3.92yrsno datano data
Susan Haindl
Senior VP & Chief Administrative Officer4yrsno datano data
Brian Dingerdissen
VP & Chief of Staffno datano datano data
Christina Kelly
Senior VP & Chief Human Resources Officer1.83yrsno datano data

4.0yrs

Average Tenure

52.5yo

Average Age

Experienced Management: WTRG's management team is considered experienced (4 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Christopher Franklin
Chairman4.67yrsUS$3.55m0.066% $6.5m
Nicholas DeBenedictis
Chairman Emeritus2.17yrsUS$182.52k0.0096% $947.8k
Lee Stewart
Independent Director1.58yrsUS$39.92k0.0054% $536.8k
Christopher Womack
Independent Director0.83yrno data0.00062% $61.4k
Daniel Hilferty
Lead Independent Director2.25yrsUS$183.77k0.0072% $717.0k
Ellen Ruff
Independent Director13.58yrsUS$169.39k0.012% $1.2m
Elizabeth Amato
Independent Director1.58yrsUS$39.99k0.0013% $132.7k
Francis Idehen
Independent Director0.75yrno data0.00062% $61.4k
Wendy Franks
Independent Directorno datano datano data

1.9yrs

Average Tenure

62yo

Average Age

Experienced Board: WTRG's board of directors are not considered experienced ( 1.9 years average tenure), which suggests a new board.


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: WTRG insiders have sold more shares than they have bought in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 21.2%.


Top Shareholders

Company Information

Essential Utilities, Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Essential Utilities, Inc.
  • Ticker: WTRG
  • Exchange: NYSE
  • Founded: 1886
  • Industry: Water Utilities
  • Sector: Utilities
  • Market Cap: US$9.904b
  • Shares outstanding: 245.02m
  • Website: https://www.essential.co

Number of Employees


Location

  • Essential Utilities, Inc.
  • 762 West Lancaster Avenue
  • Bryn Mawr
  • Pennsylvania
  • 19010-3489
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
WTRGNYSE (New York Stock Exchange)YesCommon StockUSUSDJan 1969
A2ADB (Deutsche Boerse AG)YesCommon StockDEEURJan 1969
WTR *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNJan 1969

Biography

Essential Utilities, Inc., through its subsidiaries, operates regulated utilities that provide water or wastewater services in the United States. It offers water services through operating and maintenance contracts 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 3 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, and Virginia. 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. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/03/29 01:16
End of Day Share Price2020/03/27 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.