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Essential Utilities Inc (WTRG - Free Report) recently announced its long-term guidance, increasing its 3- year capital investment by $100 million annually from the current plan. WTRG also initiated its 2023 earnings guidance and maintained its 2022 earnings expectation. The company expects its earnings per share to increase through 2025, at a compounded annual growth rate (CAGR) of 5 to 7%, based off the company’s 2022 guidance range of $1.75-$1.80 earnings per share.
Guidance in Details
Essential Utilities expects its regulated water customer base to expand annually within the range of 2 to 3% with contributions from organic ventures and acquisitions. Its natural gas customer base is expected to remain stable in 2023.
The company’s 2022 guidance range of earnings per share was of $1.75-$1.80. The Zacks Consensus Estimate for its 2023 earnings is currently pegged at $1.89 per share. According to new guidance, WTRG’s earnings per share will witness a CAGR of 5-7% through 2025.
This regulated utility is expected to benefit from an expanding rate base. Through 2025, the rate base for the regulated water and regulated natural gas segments will witness a CAGR of 6% to 7% and 8% to 10% respectively.
The company also aims to reduce carbon footprints and lower Scope 1 and Scope 2 greenhouse gas emissions by 60% by 2035, from the company’s 2019 baseline. The updated infrastructure investments will be $3.3 billion through 2025.
Consolidation in Fragmented Water Space
According to the Environmental Protection Agency, more than 50,000 community water systems and 16,000 community wastewater systems in the United States are providing water solutions to customers at present. Due to a large number of small operators in the industry and a lack of adequate funds, at times, essential upgrades and repairs of infrastructure get delayed.
The acquisition of small units by larger utilities ensures necessary investments for the upgrade of infrastructure and the continuation of high-quality services to customers. American Water Works continues to widen its market footprint through strategic acquisitions.
Essential Utilities is also taking the inorganic route to expand operations. In 2022, Essential Utilities acquired three water and wastewater systems, and added nearly $120 million in rate base and over 23,000 new customers to its existing customer base. At present, WTRG has signed seven purchase agreements on closure, which will expand its customer base by nearly 218,000 customers.
Apart from Essential Utilities, other water utilities like American Water Works (AWK - Free Report) , SJW Group (SJW - Free Report) and Consolidated Water Co. (CWCO - Free Report) in the water utility space are expanding operations through systematic acquisitions.
American Water Works has been making strategic acquisitions to expand its operations. As of Sep 30, 2022, the company added 65,300 customers to its existing customer base through 15 closed acquisitions. AWK’s pending acquisitions (as of Sep 30, 2022), when completed, will add another 21,600 customers to its customer base.
The Zacks Consensus Estimate for American Water Works' 2022 and 2023 earnings suggests year-over-year growth of 4.9% and 7.1%, respectively. The current dividend yield of the company is 1.66%.
SJW Group completed more than 25 acquisitions in the 2010-2021 time frame and expanded its operations. In January 2022, it closed the acquisition of Texas Country Water in Comal, TX. The deal added more than 1,900 water and wastewater customers to its existing customer base. This has been the fourth Texas acquisition by SJW Group in the past 12 months. In the next five years, the company plans to invest $1.5 billion to further strengthen its infrastructure.
The Zacks Consensus Estimate for SJW Group's 2022 and 2023 earnings implies year-over-year growth of 15.3% and 5.9%, respectively. The current dividend yield of the company is 1.8%.
Consolidated Water has recently exercised its right to acquire the remaining 39% of equity ownership of PERC Water Corporation (PERC) for nearly $7.8 million. PERC’s strong operating performance, revenue growth and profitability, as well as its synergies with other areas of CWCO’s business and future growth prospects, are going to boost CWCO’s performance.
The Zacks Consensus Estimate for CWCO's 2022 and 2023 earnings implies year-over-year growth of 143.4% and 62.5%, respectively. The current dividend yield of the company is 2.3%.
Price Performance
Over the last three months, the Essential Utilities stock has returned 16.9%, outperforming the industry average of 13.9%.
Image Source: Zacks Investment Research
Zacks Rank
Essential Utilities currently has a Zacks Rank #4 (Sell).
Image: Bigstock
Essential Utilities (WTRG) Unveils 2023 & Long-Term Guidance
Essential Utilities Inc (WTRG - Free Report) recently announced its long-term guidance, increasing its 3- year capital investment by $100 million annually from the current plan. WTRG also initiated its 2023 earnings guidance and maintained its 2022 earnings expectation. The company expects its earnings per share to increase through 2025, at a compounded annual growth rate (CAGR) of 5 to 7%, based off the company’s 2022 guidance range of $1.75-$1.80 earnings per share.
Guidance in Details
Essential Utilities expects its regulated water customer base to expand annually within the range of 2 to 3% with contributions from organic ventures and acquisitions. Its natural gas customer base is expected to remain stable in 2023.
The company’s 2022 guidance range of earnings per share was of $1.75-$1.80. The Zacks Consensus Estimate for its 2023 earnings is currently pegged at $1.89 per share. According to new guidance, WTRG’s earnings per share will witness a CAGR of 5-7% through 2025.
This regulated utility is expected to benefit from an expanding rate base. Through 2025, the rate base for the regulated water and regulated natural gas segments will witness a CAGR of 6% to 7% and 8% to 10% respectively.
The company also aims to reduce carbon footprints and lower Scope 1 and Scope 2 greenhouse gas emissions by 60% by 2035, from the company’s 2019 baseline. The updated infrastructure investments will be $3.3 billion through 2025.
Consolidation in Fragmented Water Space
According to the Environmental Protection Agency, more than 50,000 community water systems and 16,000 community wastewater systems in the United States are providing water solutions to customers at present. Due to a large number of small operators in the industry and a lack of adequate funds, at times, essential upgrades and repairs of infrastructure get delayed.
The acquisition of small units by larger utilities ensures necessary investments for the upgrade of infrastructure and the continuation of high-quality services to customers. American Water Works continues to widen its market footprint through strategic acquisitions.
Essential Utilities is also taking the inorganic route to expand operations. In 2022, Essential Utilities acquired three water and wastewater systems, and added nearly $120 million in rate base and over 23,000 new customers to its existing customer base. At present, WTRG has signed seven purchase agreements on closure, which will expand its customer base by nearly 218,000 customers.
Apart from Essential Utilities, other water utilities like American Water Works (AWK - Free Report) , SJW Group (SJW - Free Report) and Consolidated Water Co. (CWCO - Free Report) in the water utility space are expanding operations through systematic acquisitions.
American Water Works has been making strategic acquisitions to expand its operations. As of Sep 30, 2022, the company added 65,300 customers to its existing customer base through 15 closed acquisitions. AWK’s pending acquisitions (as of Sep 30, 2022), when completed, will add another 21,600 customers to its customer base.
The Zacks Consensus Estimate for American Water Works' 2022 and 2023 earnings suggests year-over-year growth of 4.9% and 7.1%, respectively. The current dividend yield of the company is 1.66%.
SJW Group completed more than 25 acquisitions in the 2010-2021 time frame and expanded its operations. In January 2022, it closed the acquisition of Texas Country Water in Comal, TX. The deal added more than 1,900 water and wastewater customers to its existing customer base. This has been the fourth Texas acquisition by SJW Group in the past 12 months. In the next five years, the company plans to invest $1.5 billion to further strengthen its infrastructure.
The Zacks Consensus Estimate for SJW Group's 2022 and 2023 earnings implies year-over-year growth of 15.3% and 5.9%, respectively. The current dividend yield of the company is 1.8%.
Consolidated Water has recently exercised its right to acquire the remaining 39% of equity ownership of PERC Water Corporation (PERC) for nearly $7.8 million. PERC’s strong operating performance, revenue growth and profitability, as well as its synergies with other areas of CWCO’s business and future growth prospects, are going to boost CWCO’s performance.
The Zacks Consensus Estimate for CWCO's 2022 and 2023 earnings implies year-over-year growth of 143.4% and 62.5%, respectively. The current dividend yield of the company is 2.3%.
Price Performance
Over the last three months, the Essential Utilities stock has returned 16.9%, outperforming the industry average of 13.9%.
Image Source: Zacks Investment Research
Zacks Rank
Essential Utilities currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.