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Why Is Essential Utilities (WTRG) Up 2% Since Last Earnings Report?
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It has been about a month since the last earnings report for Essential Utilities (WTRG - Free Report) . Shares have added about 2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Essential Utilities due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Essential Q4 Earnings Match Estimates, Revenues Lag
Essential Utilities Inc. reported fourth-quarter 2020 earnings per share of 46 cents, on par with the Zacks Consensus Estimate. The reported earnings were 35.3% higher than 34 cents per share recorded in the year-ago quarter.
GAAP earnings per share for the reported quarter were 40 cents compared with 28 cents in the year-ago period.
Total Revenues
Fourth-quarter revenues of $474 million were up 109.7% year over year. The year-over-year improvement in total revenues was due to contribution from its acquired natural gas assets, increased volume, growth and rate, along with surcharge increases in the regulated water segment. However, total revenues for the reported quarter missed the Zacks Consensus Estimate by 12.4%.
Highlights of the Release
The company continues to expand operations through strategic acquisitions. In 2020, Essential invested nearly $62.9 million to acquire six water and wastewater systems. These acquisitions added approximately 12,000 new customers. Backed by organic growth, total water and wastewater customer base expanded 2% year over year, with 20,500 new customer connections.
In 2020, the regulated water segment received rate awards in different jurisdictions that led to an increase in annualized revenues of the company by $21 million. The regulated natural gas segment received rate awards in the said period that further boosted annualized revenues by $1 million. Year to date, its regulated water segment received rate awards in New Jersey, North Carolina, Ohio and Pennsylvania of $8.5 million. The company currently has rate proceedings pending in Virginia and Indiana worth $1.8 million.
Operation and maintenance expenses increased 84.3% year over year to $157.2 million. This was attributed to an increase in Peoples transaction-related costs, and the regulated natural gas segment’s operation as well as maintenance expenses.
Operating income for the reported quarter was $132.9 million, up 55.8% year over year.
Interest expenses increased 56.5% to $51.8 million from $33.1 million in the year-ago quarter.
Financial Highlights
Current assets were $380.2 million as of Dec 31, 2020 compared with $2,015.1 million in the corresponding period of 2019. Long-term debt was $5,507.8 million as of Dec 31, 2020, higher than $2,943.3 million in the comparable period of 2019.
Essential invested $900 million in 2020 to improve regulated water and natural gas infrastructure systems.
Guidance
The company issued its 2021 earnings guidance in the range of $1.64-$1.69 per share. The mid-point of the earnings guidance is on par with the corresponding Zacks Consensus Estimate of $1.67 per share.
The water segment’s customer base is expected to expand 2-3% via acquisitions and organic customer growth.
The company plans to invest $550 million in the regulated water segment and $450 million in the regulated gas segment in 2021. This capital expenditure is part of its total investment plan of $3 billion through 2023.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
VGM Scores
Currently, Essential Utilities has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Essential Utilities has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Essential Utilities (WTRG) Up 2% Since Last Earnings Report?
It has been about a month since the last earnings report for Essential Utilities (WTRG - Free Report) . Shares have added about 2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Essential Utilities due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Essential Q4 Earnings Match Estimates, Revenues Lag
Essential Utilities Inc. reported fourth-quarter 2020 earnings per share of 46 cents, on par with the Zacks Consensus Estimate. The reported earnings were 35.3% higher than 34 cents per share recorded in the year-ago quarter.
GAAP earnings per share for the reported quarter were 40 cents compared with 28 cents in the year-ago period.
Total Revenues
Fourth-quarter revenues of $474 million were up 109.7% year over year. The year-over-year improvement in total revenues was due to contribution from its acquired natural gas assets, increased volume, growth and rate, along with surcharge increases in the regulated water segment. However, total revenues for the reported quarter missed the Zacks Consensus Estimate by 12.4%.
Highlights of the Release
The company continues to expand operations through strategic acquisitions. In 2020, Essential invested nearly $62.9 million to acquire six water and wastewater systems. These acquisitions added approximately 12,000 new customers. Backed by organic growth, total water and wastewater customer base expanded 2% year over year, with 20,500 new customer connections.
In 2020, the regulated water segment received rate awards in different jurisdictions that led to an increase in annualized revenues of the company by $21 million. The regulated natural gas segment received rate awards in the said period that further boosted annualized revenues by $1 million. Year to date, its regulated water segment received rate awards in New Jersey, North Carolina, Ohio and Pennsylvania of $8.5 million. The company currently has rate proceedings pending in Virginia and Indiana worth $1.8 million.
Operation and maintenance expenses increased 84.3% year over year to $157.2 million. This was attributed to an increase in Peoples transaction-related costs, and the regulated natural gas segment’s operation as well as maintenance expenses.
Operating income for the reported quarter was $132.9 million, up 55.8% year over year.
Interest expenses increased 56.5% to $51.8 million from $33.1 million in the year-ago quarter.
Financial Highlights
Current assets were $380.2 million as of Dec 31, 2020 compared with $2,015.1 million in the corresponding period of 2019. Long-term debt was $5,507.8 million as of Dec 31, 2020, higher than $2,943.3 million in the comparable period of 2019.
Essential invested $900 million in 2020 to improve regulated water and natural gas infrastructure systems.
Guidance
The company issued its 2021 earnings guidance in the range of $1.64-$1.69 per share. The mid-point of the earnings guidance is on par with the corresponding Zacks Consensus Estimate of $1.67 per share.
The water segment’s customer base is expected to expand 2-3% via acquisitions and organic customer growth.
The company plans to invest $550 million in the regulated water segment and $450 million in the regulated gas segment in 2021. This capital expenditure is part of its total investment plan of $3 billion through 2023.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
VGM Scores
Currently, Essential Utilities has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Essential Utilities has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.