Essential Utilities, Inc. (WTRG) stock analysis

P/E above its 5-year median

Essential Utilities's P/E of 22.4 is above its own 5-year median of 19.9.

P/E above the industry

Essential Utilities's P/E of 22.4 is above the Water Supply median of 22.4.

EV/EBITDA below its 5-year median

Essential Utilities's EV/EBITDA of 15.5 is below its 5-year median of 16.3.

P/B below the industry

Essential Utilities's price-to-book of 1.78 is below the Water Supply median of 1.79.

Trading above fair value

The share price of $44.65 is above our fair value estimate of $43.92.

Margin of safety under 20%

The price is 1.7% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew 2.6% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew 7.5% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew -15.2% over the last twelve months, against a 5-year average of 16.7% a year.

Growing faster than the industry

Revenue grew 9.2% over the last twelve months; the Water Supply median is 5.9%.

Guidance issued

The latest outlook (2026 infrastructure investments, Nov 4, 2026) was issued for the first time, so it neither adds nor takes away points.

Gross margin trend

This company does not report gross profit.

Return on equity under 15%

Return on equity was 8.1% over the last twelve months and averaged 9.1% over five years; we look for 15% on both.

Return on capital under 10%

Return on invested capital was 5.8%, below the 10% that usually covers the cost of capital.

Return on equity below the industry

Essential Utilities's return on equity of 8.1% is below the Water Supply median of 9.2%.

Earnings grew over 5 years

Net income grew 16.7% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 21.8% over the last twelve months, against a 5-year average of 24.2%.

Net margin above the industry

Essential Utilities's net margin of 21.8% is above the Water Supply median of 20.1%.

High debt

Debt is 120% of shareholders' equity, above the 40% we consider low.

Debt rising against equity

Debt to equity rose from 119% five years ago to 120%.

Debt not well covered by cash flow

Operating cash flow over the last twelve months equals 12.0% of total debt; we look for at least 20%.

Interest not well covered

Operating income covers interest expense 2.6 times; we look for at least 5.

Short-term assets don't cover short-term debts

Current assets are 0.40 times current liabilities.

Elevated bankruptcy risk

The Altman Z-score is 0.98; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Essential Utilities paid dividends worth 2.3% of the share price over the last twelve months.

Yield below Treasuries

The 2.3% yield is below the 4.6% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.9% or more; Essential Utilities yields 2.3%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 69.4% of net income.

Cash-flow cover

Needs dividends paid and free cash flow.