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Essential Utilities (WTRG) Up 4.8% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Essential Utilities (WTRG - Free Report) . Shares have added about 4.8% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Essential Q4 Earnings and Revenues Beat Estimates
Essential Utilities Inc. reported fourth-quarter 2021 operating earnings per share (EPS) of 44 cents, which surpassed the Zacks Consensus Estimate of 43 cents by 2.3%. However, the bottom line narrowed 4.3% from the year-ago quarter’s earnings of 46 cents per share.
Essential reported operating EPS of $1.67 in 2021, up 31.5% from $1.27 in 2020. Total earnings also surpassed the Zacks Consensus Estimate of $1.66 per share by 0.6%.
Total Revenues
The fourth quarter’s operating revenues of $535.7 million were up 8.7% from $493 million in the prior-year quarter. The year-over-year improvement in total revenues was due to the recovery of purchased gas costs, customer growth and new rate increases in the regulated water segment.
Operating revenues for the fourth quarter surpassed the Zacks Consensus Estimate of $497 million by 7.8%.
Essential reported total revenues of $1,878.1 million in 2021, up 28.4% from $1,462.7 million in 2020. Total revenues also surpassed the Zacks Consensus Estimate of $1,840 million by 2.1%.
Highlights of the Release
Essential continues to expand operations through acquisitions. The pipeline of potential water and wastewater municipal acquisitions, once completed, will add nearly 415,000 customers to the existing customer base.
In 2021, the regulated water segment received rate awards in different jurisdictions, which led to an increase in annualized revenues by $28.8 million. WTRG’s regulated natural gas segment received rate awards or infrastructure surcharges in Pennsylvania and Kentucky, which is estimated to increase annualized revenues by $1.3 million. Year-to-date 2022, Essential already received approval for $13.4 million new rates from the utility commission. Essential currently has proceedings pending for the water segment, which, on approval, is estimated to add $106.4 million to annual revenues.
Operation and maintenance expenses for the fourth quarter were $158.6 million, up 0.9% from the year-ago quarter figure of $157.2 million.
Operating income for the reported quarter was $139.6 million, up 5.1% year over year.
Interest expenses increased 2% to $52.8 million from $51.8 million in the year-ago quarter.
Financial Highlights
Current assets were $437.8 million as of Dec 31, 2021 compared with $380.2 million on Dec 31, 2020. Long-term debt was $5,779.5 million as of Dec 31, 2021, higher than $5,507.8 million on Dec 31, 2020.
Essential invested more than $1 billion in 2021 to replace and expand the water and wastewater utility infrastructure as well as upgrade the natural gas utility infrastructure.
Guidance
Essential initiated the 2022 earnings guidance in the range of $1.75-$1.80 per share. The midpoint of the earnings guidance is on par with the corresponding Zacks Consensus Estimate of $1.78 per share. WTRG expects EPS growth of 5-7% from 2021 through 2024.
For 2022, Essential reiterated the customer base from the water segment to expand 2-3% due to acquisitions and organic customer growth.
Essential also plans to invest nearly $1 billion in 2022 and $3 billion through 2024 to improve the water and natural gas systems and to better serve customers through the usage of improved information technology.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, Essential Utilities has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision has been net zero. Notably, Essential Utilities has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Essential Utilities (WTRG) Up 4.8% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Essential Utilities (WTRG - Free Report) . Shares have added about 4.8% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Essential Q4 Earnings and Revenues Beat Estimates
Essential Utilities Inc. reported fourth-quarter 2021 operating earnings per share (EPS) of 44 cents, which surpassed the Zacks Consensus Estimate of 43 cents by 2.3%. However, the bottom line narrowed 4.3% from the year-ago quarter’s earnings of 46 cents per share.
Essential reported operating EPS of $1.67 in 2021, up 31.5% from $1.27 in 2020. Total earnings also surpassed the Zacks Consensus Estimate of $1.66 per share by 0.6%.
Total Revenues
The fourth quarter’s operating revenues of $535.7 million were up 8.7% from $493 million in the prior-year quarter. The year-over-year improvement in total revenues was due to the recovery of purchased gas costs, customer growth and new rate increases in the regulated water segment.
Operating revenues for the fourth quarter surpassed the Zacks Consensus Estimate of $497 million by 7.8%.
Essential reported total revenues of $1,878.1 million in 2021, up 28.4% from $1,462.7 million in 2020. Total revenues also surpassed the Zacks Consensus Estimate of $1,840 million by 2.1%.
Highlights of the Release
Essential continues to expand operations through acquisitions. The pipeline of potential water and wastewater municipal acquisitions, once completed, will add nearly 415,000 customers to the existing customer base.
In 2021, the regulated water segment received rate awards in different jurisdictions, which led to an increase in annualized revenues by $28.8 million. WTRG’s regulated natural gas segment received rate awards or infrastructure surcharges in Pennsylvania and Kentucky, which is estimated to increase annualized revenues by $1.3 million. Year-to-date 2022, Essential already received approval for $13.4 million new rates from the utility commission. Essential currently has proceedings pending for the water segment, which, on approval, is estimated to add $106.4 million to annual revenues.
Operation and maintenance expenses for the fourth quarter were $158.6 million, up 0.9% from the year-ago quarter figure of $157.2 million.
Operating income for the reported quarter was $139.6 million, up 5.1% year over year.
Interest expenses increased 2% to $52.8 million from $51.8 million in the year-ago quarter.
Financial Highlights
Current assets were $437.8 million as of Dec 31, 2021 compared with $380.2 million on Dec 31, 2020. Long-term debt was $5,779.5 million as of Dec 31, 2021, higher than $5,507.8 million on Dec 31, 2020.
Essential invested more than $1 billion in 2021 to replace and expand the water and wastewater utility infrastructure as well as upgrade the natural gas utility infrastructure.
Guidance
Essential initiated the 2022 earnings guidance in the range of $1.75-$1.80 per share. The midpoint of the earnings guidance is on par with the corresponding Zacks Consensus Estimate of $1.78 per share. WTRG expects EPS growth of 5-7% from 2021 through 2024.
For 2022, Essential reiterated the customer base from the water segment to expand 2-3% due to acquisitions and organic customer growth.
Essential also plans to invest nearly $1 billion in 2022 and $3 billion through 2024 to improve the water and natural gas systems and to better serve customers through the usage of improved information technology.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, Essential Utilities has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision has been net zero. Notably, Essential Utilities has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.