Essential Utilities, Inc. (WTRG) Bundle
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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