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4 Reasons to Add Essential Utilities to Your Portfolio Now
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Essential Utilities Inc.’s (WTRG - Free Report) steady capital investment, strategic acquisitions, customer additions and organic growth are boosting its performance.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a strong investment pick at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Growth Projections
The Zacks Consensus Estimate for 2020 earnings per share and revenues is pegged at $1.56 and $1.49 billion, suggesting an increase of 6.1% and 67.4%, respectively, from the year-ago quarter.
The consensus mark for 2021 earnings and revenues is pegged at $1.67 per share and $1.86 billion, respectively. The bottom- and top-line estimates suggest a 6.8% and 24.9% year-over-year increase, respectively.
Surprise History & Long-Term Earnings Growth
Essential Utilities’ trailing four-quarter earnings surprise is 9.7%, on average.
Its long-term (three to five years) earnings growth is currently pegged at 6.01%.
Acquisitions
Essential Utilities is consistently making acquisitions that are boosting the bottom line. The natural gas utility acquired by Essential Utilities in the first quarter accounted for $149.6 million of the latter’s second-quarter 2020 revenue growth.
Since 2015, Essential Utilities has closed 57 acquisitions, which added 48,000 new connections and expanded its rate base by nearly $237 million. It has already closed two acquisitions in the year-to-date period and the other two pending acquisitions, when completed, will expand the rate base by nearly $334 million. The company expects to generate $5 million in incremental earnings for every $100 million in rate base expansion.
Regular Investment
Essential Utilities makes consistent investment to upgrade and maintain the existing infrastructure for providing 24x7 reliable services to the expanding customer base. Essential Utilities plans to invest $550 million in the regulated water segment and $400 million in the regulated gas segment in 2020. The company aims to invest more than $2.8 billion over the 2020-2022 time period to rehabilitate and strengthen water, as well as gas infrastructure.
Another water utility, American Water Works (AWK - Free Report) is also very active in upgrading its water and wastewater infrastructure, as well as making regular investment. American Water has plans to invest $8.8-$9.4 billion in the 2020-2024 time period and $20-$22 billion in the next decade.
Price Performance
Over the past month, the stock has gained 5.3% compared with the industry’s growth of 5.1%.
American States Water delivered an average earnings surprise of 0.2% in the last four quarters. The Zacks Consensus Estimate for 2020 earnings has moved up 2.7% in the past 90 days.
Middlesex Water delivered an average earnings surprise of 6.9% in the last four quarters. The Zacks Consensus Estimate for 2020 earnings has moved up 1.4% in the past 90 days.
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4 Reasons to Add Essential Utilities to Your Portfolio Now
Essential Utilities Inc.’s (WTRG - Free Report) steady capital investment, strategic acquisitions, customer additions and organic growth are boosting its performance.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a strong investment pick at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Growth Projections
The Zacks Consensus Estimate for 2020 earnings per share and revenues is pegged at $1.56 and $1.49 billion, suggesting an increase of 6.1% and 67.4%, respectively, from the year-ago quarter.
The consensus mark for 2021 earnings and revenues is pegged at $1.67 per share and $1.86 billion, respectively. The bottom- and top-line estimates suggest a 6.8% and 24.9% year-over-year increase, respectively.
Surprise History & Long-Term Earnings Growth
Essential Utilities’ trailing four-quarter earnings surprise is 9.7%, on average.
Its long-term (three to five years) earnings growth is currently pegged at 6.01%.
Acquisitions
Essential Utilities is consistently making acquisitions that are boosting the bottom line. The natural gas utility acquired by Essential Utilities in the first quarter accounted for $149.6 million of the latter’s second-quarter 2020 revenue growth.
Since 2015, Essential Utilities has closed 57 acquisitions, which added 48,000 new connections and expanded its rate base by nearly $237 million. It has already closed two acquisitions in the year-to-date period and the other two pending acquisitions, when completed, will expand the rate base by nearly $334 million. The company expects to generate $5 million in incremental earnings for every $100 million in rate base expansion.
Regular Investment
Essential Utilities makes consistent investment to upgrade and maintain the existing infrastructure for providing 24x7 reliable services to the expanding customer base. Essential Utilities plans to invest $550 million in the regulated water segment and $400 million in the regulated gas segment in 2020. The company aims to invest more than $2.8 billion over the 2020-2022 time period to rehabilitate and strengthen water, as well as gas infrastructure.
Another water utility, American Water Works (AWK - Free Report) is also very active in upgrading its water and wastewater infrastructure, as well as making regular investment. American Water has plans to invest $8.8-$9.4 billion in the 2020-2024 time period and $20-$22 billion in the next decade.
Price Performance
Over the past month, the stock has gained 5.3% compared with the industry’s growth of 5.1%.
Other Stocks to Consider
Other top-ranked stocks in the same space include American States Water Company (AWR - Free Report) and Middlesex Water Company (MSEX - Free Report) , each currently holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
American States Water delivered an average earnings surprise of 0.2% in the last four quarters. The Zacks Consensus Estimate for 2020 earnings has moved up 2.7% in the past 90 days.
Middlesex Water delivered an average earnings surprise of 6.9% in the last four quarters. The Zacks Consensus Estimate for 2020 earnings has moved up 1.4% in the past 90 days.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through Q2 2020, while the S&P 500 gained an impressive +44.0%, five of our strategies returned +50.9%, +93.8%, +122.2%, +153.0%, and even +156.8%.
This outperformance has not just been a recent phenomenon. From 2000 – Q2 2020, while the S&P averaged +5.5% per year, our top strategies averaged up to +51.7% per year.
See their latest picks free >>