Results: Essential Utilities, Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates

Essential Utilities, Inc. (NYSE:WTRG) defied analyst predictions to release its quarterly results, which were ahead of market expectations. Essential Utilities delivered a significant beat to revenue and earnings per share (EPS) expectations, hitting US$515m-10% above indicated-andUS$0.38-28% above forecasts- respectively 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Essential Utilities after the latest results.

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Taking into account the latest results, Essential Utilities' six analysts currently expect revenues in 2025 to be US$2.37b, approximately in line with the last 12 months. Statutory earnings per share are forecast to dip 6.5% to US$2.15 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$2.34b and earnings per share (EPS) of US$2.10 in 2025. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

View our latest analysis for Essential Utilities

There's been no major changes to the consensus price target of US$45.22, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Essential Utilities analyst has a price target of US$56.00 per share, while the most pessimistic values it at US$41.00. 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.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the 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 2025 expected to display 3.0% growth on an annualised basis. This is compared to a historical growth rate of 8.4% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 6.3% annually. Factoring in the forecast slowdown in growth, it seems obvious that Essential Utilities is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Essential Utilities following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Essential Utilities' revenue is expected to perform worse than the wider industry. The consensus price target held steady at US$45.22, with the latest estimates not enough to have an impact on their price targets.

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 2027, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 2 warning signs for Essential Utilities (1 is a bit concerning!) that you need to be mindful of.

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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.