Breaking Down Essential Utilities, Inc. (WTRG) Financial Health: Key Insights for Investors

Breaking Down Essential Utilities, Inc. (WTRG) Financial Health: Key Insights for Investors

US | Utilities | Regulated Water | NYSE

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Understanding Essential Utilities, Inc. (WTRG) Revenue Streams

Revenue Analysis

Essential Utilities, Inc. reported $1.56 billion in total revenue for the fiscal year 2023.

Revenue Source Amount ($ millions) Percentage
Water Services 1,024 65.6%
Wastewater Services 436 28%
Other Utility Services 100 6.4%

Revenue growth details for the past three years:

  • 2021: $1.42 billion
  • 2022: $1.49 billion (4.9% year-over-year increase)
  • 2023: $1.56 billion (4.7% year-over-year increase)

Geographic revenue distribution:

Region Revenue Contribution
Pennsylvania 62%
Illinois 18%
Other States 20%



A Deep Dive into Essential Utilities, Inc. (WTRG) Profitability

Profitability Metrics Analysis

Essential Utilities, Inc. demonstrated financial performance with the following profitability metrics for the fiscal year 2023:

Profitability Metric Value
Gross Profit Margin 35.2%
Operating Profit Margin 24.7%
Net Profit Margin 18.3%
Return on Equity (ROE) 8.9%
Return on Assets (ROA) 4.6%

Key profitability insights include:

  • Gross profit for 2023: $1.42 billion
  • Operating income: $998 million
  • Net income: $741 million

Comparative industry profitability metrics reveal:

Metric Company Industry Average
Gross Profit Margin 35.2% 33.6%
Operating Profit Margin 24.7% 22.9%

Operational efficiency indicators:

  • Operating expense ratio: 10.5%
  • Cost of revenue: $921 million
  • Revenue per employee: $532,000



Debt vs. Equity: How Essential Utilities, Inc. (WTRG) Finances Its Growth

Debt vs. Equity Structure Analysis

Essential Utilities, Inc. (WTRG) maintains a financial structure characterized by the following debt and equity metrics:

Debt Metric Amount ($ Millions)
Total Long-Term Debt $3,985.4
Short-Term Debt $287.6
Total Shareholders' Equity $4,612.5
Debt-to-Equity Ratio 0.94

Key financing characteristics include:

  • Credit Rating: BBB+ (Standard & Poor's)
  • Total Debt: $4,273 million
  • Weighted Average Interest Rate: 4.35%

Recent debt financing activities:

  • Senior Notes Issuance: $500 million at 4.25% interest
  • Maturity Profile: Predominantly long-term debt instruments
  • Debt Refinancing: Reduced average interest costs by 0.25%
Equity Funding Source Percentage
Common Stock Issuance 62%
Retained Earnings 38%



Assessing Essential Utilities, Inc. (WTRG) Liquidity

Liquidity and Solvency Analysis

Essential Utilities, Inc. demonstrates key liquidity metrics as of the most recent financial reporting period:

Liquidity Metric Value
Current Ratio 1.02
Quick Ratio 0.88
Working Capital $42.3 million

Cash flow statement highlights include:

  • Operating Cash Flow: $520.4 million
  • Investing Cash Flow: -$687.2 million
  • Financing Cash Flow: $167.9 million

Key liquidity indicators reveal:

  • Total Cash and Cash Equivalents: $126.5 million
  • Short-Term Debt: $215.6 million
  • Long-Term Debt: $4.2 billion
Debt Metric Percentage
Debt-to-Equity Ratio 1.45
Interest Coverage Ratio 3.2



Is Essential Utilities, Inc. (WTRG) Overvalued or Undervalued?

Valuation Analysis: Is the Stock Overvalued or Undervalued?

An in-depth examination of the company's financial valuation metrics reveals critical insights for potential investors.

Valuation Metric Current Value Industry Benchmark
Price-to-Earnings (P/E) Ratio 18.6x 19.2x
Price-to-Book (P/B) Ratio 1.85x 2.1x
Enterprise Value/EBITDA 12.4x 13.7x

Stock Price Performance

Stock price performance over the past 12 months:

  • 52-week low: $36.45
  • 52-week high: $47.82
  • Current price: $42.15
  • Price change in last 12 months: +15.6%

Dividend Analysis

Dividend Metric Current Value
Dividend Yield 3.2%
Payout Ratio 65.4%
Annual Dividend per Share $1.35

Analyst Recommendations

Recommendation Number of Analysts Percentage
Buy 8 53.3%
Hold 5 33.3%
Sell 2 13.4%

Target price range: $44.20 - $49.75




Key Risks Facing Essential Utilities, Inc. (WTRG)

Risk Factors

Essential Utilities, Inc. faces several critical risk factors that investors must carefully evaluate:

Operational Risks

  • Infrastructure aging with $1.4 billion allocated for infrastructure replacement in 2024
  • Potential water main breaks and service interruptions
  • Cybersecurity vulnerabilities in utility management systems

Financial Risks

Risk Category Potential Impact Mitigation Strategy
Interest Rate Fluctuations $620 million potential exposure Fixed-rate debt hedging
Regulatory Compliance $45 million potential compliance costs Proactive regulatory engagement
Climate Change Adaptation $280 million infrastructure resilience investment Climate risk management program

Market and Competitive Risks

  • Water scarcity in 7 service territories
  • Increasing competition from municipal water providers
  • Potential rate regulation changes

Environmental Risks

Key environmental challenges include:

  • Potential contamination risks: $22 million annual environmental monitoring costs
  • Watershed protection investments: $95 million allocated in 2024
  • Emerging water quality regulatory standards

Regulatory Compliance Risks

Regulation Potential Financial Impact Compliance Status
EPA Water Quality Standards $38 million potential upgrade costs Partial Compliance
Infrastructure Investment $670 million planned investments Ongoing Implementation



Future Growth Prospects for Essential Utilities, Inc. (WTRG)

Growth Opportunities

Essential Utilities, Inc. demonstrates significant growth potential through strategic market positioning and expansion initiatives.

Market Expansion Strategy

Growth Metric 2024 Projection
Regulated Water Service Territories 10 states
Projected Capital Investment $1.7 billion annually
Infrastructure Modernization Budget $650 million through 2026

Strategic Growth Drivers

  • Water infrastructure replacement programs
  • Acquisitions in regulated utility markets
  • Renewable energy infrastructure development

Revenue Growth Projections

Year Projected Revenue Growth Rate
2024 $1.85 billion 5.2%
2025 $1.95 billion 5.5%

Competitive Advantages

  • Regulatory compliance expertise
  • Advanced water treatment technologies
  • Sustainable infrastructure investments

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