Earnings Report: Essential Utilities, Inc. Missed Revenue Estimates By 11%

As you might know, Essential Utilities, Inc. (NYSE:WTRG) recently reported its yearly numbers. Revenues were US$2.1b, 11% below analyst expectations, although losses didn't appear to worsen significantly, with a per-share statutory loss of US$1.86 being in line with what the analysts forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Essential Utilities

Taking into account the latest results, the consensus forecast from Essential Utilities' seven analysts is for revenues of US$2.36b in 2024. This reflects a meaningful 15% improvement in revenue compared to the last 12 months. Per-share earnings are expected to rise 9.2% to US$1.99. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.43b and earnings per share (EPS) of US$2.01 in 2024. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.

The average price target was steady at US$44.70even though revenue estimates declined; likely suggesting the analysts place a higher value on earnings. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Essential Utilities analyst has a price target of US$60.00 per share, while the most pessimistic values it at US$39.96. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Essential Utilities' past performance and to peers in the same industry. It's pretty clear that there is an expectation that Essential Utilities' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 15% growth on an annualised basis. This is compared to a historical growth rate of 22% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.7% annually. Even after the forecast slowdown in growth, it seems obvious that Essential Utilities is also expected to grow faster than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. They also downgraded Essential Utilities' revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. Even so, earnings are more important to the intrinsic value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Essential Utilities going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 3 warning signs for Essential Utilities (1 is a bit unpleasant!) that you need to take into consideration.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.