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Why Is Essential Utilities (WTRG) Up 12.8% 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 12.8% in that time frame, outperforming 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’s Q1 Earnings and Revenues Surpass Estimates
Essential Utilities Inc. reported first-quarter 2022 operating earnings per share of 76 cents, which surpassed the Zacks Consensus Estimate of 74 cents by 2.7%. The bottom line improved 7.5% from the year-ago quarter’s earnings of 72 cents per share.
Total Revenues
The first quarter’s operating revenues of $699.3 million were up 19.8% from $583.6 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 volume growth from the regulated natural gas segment.
Operating revenues for the first quarter surpassed the Zacks Consensus Estimate of $627 million by 11.5%.
Highlights of the Release
Essential continues to expand operations through acquisitions. The potential water and wastewater municipal acquisitions, once completed, will add nearly 415,000 customers to the existing customer base.
Currently, Essential Utilities has seven signed purchase agreements to acquire additional water and wastewater systems that are expected to serve nearly 224,000 retail customers or equivalent dwelling units and add around $418 million in rate base in three of its existing states.
Year to date, Essential Utilities’ regulated water segment received rate awards or infrastructure surcharges of $8.2 million in Illinois, North Carolina, Ohio, and Pennsylvania, and the regulated natural gas segment received a rate award of $5.2 million in Kentucky.
Operation and maintenance expenses for the first quarter were $142.6 million, up 13.4% from the year-ago figure of $125.1 million.
Operating income was $227.6 million, down 2.1% year over year.
Interest expenses increased 5.7% to $53.7 million from $50.8 million in the year-ago quarter.
Financial Highlights
Current assets were $443.5 million as of Mar 31, 2022 compared with $437.8 million on Dec 31, 2021. Long-term debt was $5,871.9 million as of Mar 31, 2022, higher than $5,779.5 million on Dec 31, 2021.
Essential invested $183.3 million in the first quarter of 2022 to replace and expand the water and wastewater utility infrastructure as well as upgrade the natural gas utility infrastructure.
Guidance
Essential reiterated 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 continues to expect that its customer base from the water segment will 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?
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 nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. 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 C. 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.
Performance of an Industry Player
Essential Utilities belongs to the Zacks Utility - Water Supply industry. Another stock from the same industry, California Water Service Group (CWT - Free Report) , has gained 9.2% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.
California Water Service Group reported revenues of $172.99 million in the last reported quarter, representing a year-over-year change of +17.1%. EPS of $0.02 for the same period compares with -$0.06 a year ago.
California Water Service Group is expected to post earnings of $0.60 per share for the current quarter, representing a year-over-year change of -20%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for California Water Service Group. Also, the stock has a VGM Score of B.
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Why Is Essential Utilities (WTRG) Up 12.8% 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 12.8% in that time frame, outperforming 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’s Q1 Earnings and Revenues Surpass Estimates
Essential Utilities Inc. reported first-quarter 2022 operating earnings per share of 76 cents, which surpassed the Zacks Consensus Estimate of 74 cents by 2.7%. The bottom line improved 7.5% from the year-ago quarter’s earnings of 72 cents per share.
Total Revenues
The first quarter’s operating revenues of $699.3 million were up 19.8% from $583.6 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 volume growth from the regulated natural gas segment.
Operating revenues for the first quarter surpassed the Zacks Consensus Estimate of $627 million by 11.5%.
Highlights of the Release
Essential continues to expand operations through acquisitions. The potential water and wastewater municipal acquisitions, once completed, will add nearly 415,000 customers to the existing customer base.
Currently, Essential Utilities has seven signed purchase agreements to acquire additional water and wastewater systems that are expected to serve nearly 224,000 retail customers or equivalent dwelling units and add around $418 million in rate base in three of its existing states.
Year to date, Essential Utilities’ regulated water segment received rate awards or infrastructure surcharges of $8.2 million in Illinois, North Carolina, Ohio, and Pennsylvania, and the regulated natural gas segment received a rate award of $5.2 million in Kentucky.
Operation and maintenance expenses for the first quarter were $142.6 million, up 13.4% from the year-ago figure of $125.1 million.
Operating income was $227.6 million, down 2.1% year over year.
Interest expenses increased 5.7% to $53.7 million from $50.8 million in the year-ago quarter.
Financial Highlights
Current assets were $443.5 million as of Mar 31, 2022 compared with $437.8 million on Dec 31, 2021. Long-term debt was $5,871.9 million as of Mar 31, 2022, higher than $5,779.5 million on Dec 31, 2021.
Essential invested $183.3 million in the first quarter of 2022 to replace and expand the water and wastewater utility infrastructure as well as upgrade the natural gas utility infrastructure.
Guidance
Essential reiterated 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 continues to expect that its customer base from the water segment will 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?
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 nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. 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 C. 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.
Performance of an Industry Player
Essential Utilities belongs to the Zacks Utility - Water Supply industry. Another stock from the same industry, California Water Service Group (CWT - Free Report) , has gained 9.2% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.
California Water Service Group reported revenues of $172.99 million in the last reported quarter, representing a year-over-year change of +17.1%. EPS of $0.02 for the same period compares with -$0.06 a year ago.
California Water Service Group is expected to post earnings of $0.60 per share for the current quarter, representing a year-over-year change of -20%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for California Water Service Group. Also, the stock has a VGM Score of B.