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Essential Utilities (WTRG) Down 0.9% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Essential Utilities (WTRG - Free Report) . Shares have lost about 0.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Essential Utilities due for a breakout? 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 drivers.
Essential Utilities Q2 Earnings & Sales Miss Estimates
Essential Utilities Inc. delivered second-quarter 2024 operating earnings per share (EPS) of 28 cents, which lagged the Zacks Consensus Estimate of 30 cents by 6.7%.
The bottom line also missed the year-ago quarter’s earnings of 34 cents by 17.6%. The year-over-year decline in earnings was due to the impact of weather, which was warmer than normal, lowering demand for utility services and increasing expenses.
Total Revenues
Operating revenues of $434.4 million lagged the Zacks Consensus Estimate of $437 million by 0.6%. Total revenues were down 0.5% year over year.
Highlights of the Release
Operation and maintenance expenses were $142.5 million, up 6.7% from the year-ago figure of $133.5 million.
Operating income was $145.3 million, up 6.4% year over year. Interest expenses increased 5.6% to $73.3 million from $69.2 million in the prior year quarter.
Essential Utilities signed six purchase agreements to acquire additional wastewater systems that will add 217,000 retail customers or equivalent dwelling units. In the quarter, the company closed on its acquisition of the Westfield Homeowners Association wastewater system located in Cook County, IL.
To date, in 2024, the company’s regulated water segment has received rate awards or infrastructure surcharges in Illinois, North Carolina, Ohio and Pennsylvania of $25.8 million. Its regulated natural gas segment has received infrastructure surcharges in Kentucky and Pennsylvania of $2.0 million.
Financial Highlights
Current assets were $362.7 million as of Jun 30, 2024, compared with $492 million as of Dec 31, 2023.
Long-term debt was $7.01 billion as of Jun 30, 2024, higher than $6.82 billion as of Dec 31, 2023.
The company invested $548.9 million in the first half of the year to improve its regulated water and natural gas infrastructure systems and to enhance its operations and customer service.
Guidance
Essential Utilities now expects to exceed its 2024 EPS guidance of $1.96-$2. The Zacks Consensus Estimate for EPS is pegged at $1.97, a tad lower than the midpoint of the company’s guided range.
Management anticipates its customer base in the water segment to expand by 2-3% through acquisitions and organic customer growth.
The company is on track to invest $1.3-$1.4 billion in its infrastructure in 2024. Essential Utilities also plans to invest $7.2 billion through 2024-2028 to improve the water and natural gas systems and better serve its customers using improved information technology.
WTRG projects compound annual growth rate of 8% and 10% through 2028 for its regulated water and natural gas segments, respectively.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -16.67% due to these changes.
VGM Scores
At this time, Essential Utilities has a poor Growth Score of F, a grade with the same score on the momentum front. 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Essential Utilities has a Zacks Rank #4 (Sell). We expect a below average 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 3.8% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
California Water Service Group reported revenues of $244.3 million in the last reported quarter, representing a year-over-year change of +25.9%. EPS of $0.70 for the same period compares with $0.17 a year ago.
For the current quarter, California Water Service Group is expected to post earnings of $1.09 per share, indicating a change of +81.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.5% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for California Water Service Group. Also, the stock has a VGM Score of D.
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Essential Utilities (WTRG) Down 0.9% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Essential Utilities (WTRG - Free Report) . Shares have lost about 0.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Essential Utilities due for a breakout? 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 drivers.
Essential Utilities Q2 Earnings & Sales Miss Estimates
Essential Utilities Inc. delivered second-quarter 2024 operating earnings per share (EPS) of 28 cents, which lagged the Zacks Consensus Estimate of 30 cents by 6.7%.
The bottom line also missed the year-ago quarter’s earnings of 34 cents by 17.6%. The year-over-year decline in earnings was due to the impact of weather, which was warmer than normal, lowering demand for utility services and increasing expenses.
Total Revenues
Operating revenues of $434.4 million lagged the Zacks Consensus Estimate of $437 million by 0.6%. Total revenues were down 0.5% year over year.
Highlights of the Release
Operation and maintenance expenses were $142.5 million, up 6.7% from the year-ago figure of $133.5 million.
Operating income was $145.3 million, up 6.4% year over year. Interest expenses increased 5.6% to $73.3 million from $69.2 million in the prior year quarter.
Essential Utilities signed six purchase agreements to acquire additional wastewater systems that will add 217,000 retail customers or equivalent dwelling units. In the quarter, the company closed on its acquisition of the Westfield Homeowners Association wastewater system located in Cook County, IL.
To date, in 2024, the company’s regulated water segment has received rate awards or infrastructure surcharges in Illinois, North Carolina, Ohio and Pennsylvania of $25.8 million. Its regulated natural gas segment has received infrastructure surcharges in Kentucky and Pennsylvania of $2.0 million.
Financial Highlights
Current assets were $362.7 million as of Jun 30, 2024, compared with $492 million as of Dec 31, 2023.
Long-term debt was $7.01 billion as of Jun 30, 2024, higher than $6.82 billion as of Dec 31, 2023.
The company invested $548.9 million in the first half of the year to improve its regulated water and natural gas infrastructure systems and to enhance its operations and customer service.
Guidance
Essential Utilities now expects to exceed its 2024 EPS guidance of $1.96-$2. The Zacks Consensus Estimate for EPS is pegged at $1.97, a tad lower than the midpoint of the company’s guided range.
Management anticipates its customer base in the water segment to expand by 2-3% through acquisitions and organic customer growth.
The company is on track to invest $1.3-$1.4 billion in its infrastructure in 2024. Essential Utilities also plans to invest $7.2 billion through 2024-2028 to improve the water and natural gas systems and better serve its customers using improved information technology.
WTRG projects compound annual growth rate of 8% and 10% through 2028 for its regulated water and natural gas segments, respectively.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -16.67% due to these changes.
VGM Scores
At this time, Essential Utilities has a poor Growth Score of F, a grade with the same score on the momentum front. 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Essential Utilities has a Zacks Rank #4 (Sell). We expect a below average 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 3.8% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
California Water Service Group reported revenues of $244.3 million in the last reported quarter, representing a year-over-year change of +25.9%. EPS of $0.70 for the same period compares with $0.17 a year ago.
For the current quarter, California Water Service Group is expected to post earnings of $1.09 per share, indicating a change of +81.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.5% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for California Water Service Group. Also, the stock has a VGM Score of D.