ESSENTIAL UTILITIES INC (WTRG) Stock Fundamental Analysis
NYSE:WTRG - New York Stock Exchange, Inc. - US29670G1022 - Common Stock - Currency: USD
We assign a fundamental rating of 4 out of 10 to WTRG. WTRG was compared to 14 industry peers in the Water Utilities industry. While WTRG has a great profitability rating, there are quite some concerns on its financial health. WTRG has a correct valuation and a medium growth rate. Finally WTRG also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
In the past year WTRG was profitable.
WTRG had a positive operating cash flow in the past year.
WTRG had positive earnings in each of the past 5 years.
Each year in the past 5 years WTRG had a positive operating cash flow.
1.2 Ratios
WTRG has a Return On Assets of 3.48%. This is in the better half of the industry: WTRG outperforms 71.43% of its industry peers.
WTRG's Return On Equity of 9.61% is fine compared to the rest of the industry. WTRG outperforms 71.43% of its industry peers.
With a decent Return On Invested Capital value of 3.98%, WTRG is doing good in the industry, outperforming 64.29% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for WTRG is in line with the industry average of 5.00%.
The last Return On Invested Capital (3.98%) for WTRG is above the 3 year average (3.45%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.48% | ||
| ROE | 9.61% | ||
| ROIC | 3.98% |
ROA(3y)3.07%
ROA(5y)2.85%
ROE(3y)8.9%
ROE(5y)8.22%
ROIC(3y)3.45%
ROIC(5y)3.32%
1.3 Margins
WTRG has a better Profit Margin (27.62%) than 92.86% of its industry peers.
WTRG's Profit Margin has improved in the last couple of years.
With an excellent Operating Margin value of 38.74%, WTRG belongs to the best of the industry, outperforming 92.86% of the companies in the same industry.
WTRG's Operating Margin has been stable in the last couple of years.
WTRG has a better Gross Margin (84.82%) than 85.71% of its industry peers.
WTRG's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 38.74% | ||
| PM (TTM) | 27.62% | ||
| GM | 84.82% |
OM growth 3Y4.21%
OM growth 5Y-1.02%
PM growth 3Y7.49%
PM growth 5Y2.49%
GM growth 3Y1.93%
GM growth 5YN/A
2. Health
2.1 Basic Checks
WTRG has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
Compared to 1 year ago, WTRG has more shares outstanding
The number of shares outstanding for WTRG has been increased compared to 5 years ago.
WTRG has a worse debt/assets ratio than last year.
2.2 Solvency
WTRG has an Altman-Z score of 1.00. This is a bad value and indicates that WTRG is not financially healthy and even has some risk of bankruptcy.
With a Altman-Z score value of 1.00, WTRG perfoms like the industry average, outperforming 42.86% of the companies in the same industry.
WTRG has a Debt/Equity ratio of 1.14. This is a high value indicating a heavy dependency on external financing.
With a Debt to Equity ratio value of 1.14, WTRG perfoms like the industry average, outperforming 42.86% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.14 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 1 |
ROIC/WACC0.54
WACC7.41%
2.3 Liquidity
WTRG has a Current Ratio of 0.73. This is a bad value and indicates that WTRG is not financially healthy enough and could expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 0.73, WTRG is doing worse than 64.29% of the companies in the same industry.
A Quick Ratio of 0.58 indicates that WTRG may have some problems paying its short term obligations.
WTRG has a Quick ratio of 0.58. This is in the lower half of the industry: WTRG underperforms 71.43% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.73 | ||
| Quick Ratio | 0.58 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 15.63% over the past year.
Measured over the past 5 years, WTRG shows a small growth in Earnings Per Share. The EPS has been growing by 7.80% on average per year.
The Revenue has grown by 20.70% in the past year. This is a very strong growth!
The Revenue has been growing by 18.58% on average over the past years. This is quite good.
EPS 1Y (TTM)15.63%
EPS 3Y8.62%
EPS 5Y7.8%
EPS Q2Q%52%
Revenue 1Y (TTM)20.7%
Revenue growth 3Y3.56%
Revenue growth 5Y18.58%
Sales Q2Q%18.3%
3.2 Future
Based on estimates for the next years, WTRG will show a small growth in Earnings Per Share. The EPS will grow by 4.82% on average per year.
WTRG is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 6.38% yearly.
EPS Next Y-0.05%
EPS Next 2Y3.14%
EPS Next 3Y4.61%
EPS Next 5Y4.82%
Revenue Next Year8.93%
Revenue Next 2Y7.47%
Revenue Next 3Y7.18%
Revenue Next 5Y6.38%
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 16.82, the valuation of WTRG can be described as correct.
WTRG's Price/Earnings ratio is a bit cheaper when compared to the industry. WTRG is cheaper than 78.57% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 26.85, WTRG is valued a bit cheaper.
WTRG is valuated rather expensively with a Price/Forward Earnings ratio of 17.22.
78.57% of the companies in the same industry are more expensive than WTRG, based on the Price/Forward Earnings ratio.
The average S&P500 Price/Forward Earnings ratio is at 34.98. WTRG is valued rather cheaply when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.82 | ||
| Fwd PE | 17.22 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, WTRG is valued a bit cheaper than the industry average as 71.43% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 14.42 |
4.3 Compensation for Growth
The excellent profitability rating of WTRG may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)2.16
EPS Next 2Y3.14%
EPS Next 3Y4.61%
5. Dividend
5.1 Amount
WTRG has a Yearly Dividend Yield of 3.59%.
Compared to an average industry Dividend Yield of 3.43, WTRG pays a better dividend. On top of this WTRG pays more dividend than 85.71% of the companies listed in the same industry.
WTRG's Dividend Yield is rather good when compared to the S&P500 average which is at 2.36.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.59% |
5.2 History
The dividend of WTRG has a limited annual growth rate of 5.99%.
WTRG has been paying a dividend for at least 10 years, so it has a reliable track record.
WTRG has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)5.99%
Div Incr Years33
Div Non Decr Years34
5.3 Sustainability
55.62% of the earnings are spent on dividend by WTRG. This is a bit on the high side, but may be sustainable.
WTRG's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP55.62%
EPS Next 2Y3.14%
EPS Next 3Y4.61%
39.2
+0.54 (+1.4%)
Chartmill FA Rating
GICS SectorUtilities
GICS IndustryGroupUtilities
GICS IndustryWater Utilities
Earnings (Last)
Earnings (Next)
Inst Owners79.32%
Inst Owner Change0.64%
Ins Owners0.19%
Ins Owner Change5.29%
Market Cap10.99B
Analysts86.25
Price Target46.28 (18.06%)
Short Float %1.56%
Short Ratio2.35
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.59% |
Yearly Dividend1.26
Dividend Growth(5Y)5.99%
DP55.62%
Div Incr Years33
Div Non Decr Years34
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)23.2%
Min EPS beat(2)21.86%
Max EPS beat(2)24.54%
EPS beat(4)3
Avg EPS beat(4)11.66%
Min EPS beat(4)-1.24%
Max EPS beat(4)24.54%
EPS beat(8)6
Avg EPS beat(8)8.74%
EPS beat(12)7
Avg EPS beat(12)6.58%
EPS beat(16)8
Avg EPS beat(16)4.2%
Revenue beat(2)2
Avg Revenue beat(2)8.75%
Min Revenue beat(2)8.05%
Max Revenue beat(2)9.45%
Revenue beat(4)3
Avg Revenue beat(4)3%
Min Revenue beat(4)-7.87%
Max Revenue beat(4)9.45%
Revenue beat(8)4
Avg Revenue beat(8)-6.35%
Revenue beat(12)7
Avg Revenue beat(12)-2.14%
Revenue beat(16)10
Avg Revenue beat(16)-0.39%
PT rev (1m)-0.82%
PT rev (3m)-0.27%
EPS NQ rev (1m)2.43%
EPS NQ rev (3m)-56.67%
EPS NY rev (1m)0%
EPS NY rev (3m)0.1%
Revenue NQ rev (1m)1.61%
Revenue NQ rev (3m)-18.55%
Revenue NY rev (1m)0.42%
Revenue NY rev (3m)0.21%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.82 | ||
| Fwd PE | 17.22 | ||
| P/S | 4.7 | ||
| P/FCF | N/A | ||
| P/OCF | 12 | ||
| P/B | 1.64 | ||
| P/tB | 2.51 | ||
| EV/EBITDA | 14.42 |
EPS(TTM)2.33
EY5.94%
EPS(NY)2.28
Fwd EY5.81%
FCF(TTM)-1.7
FCFYN/A
OCF(TTM)3.27
OCFY8.33%
SpS8.34
BVpS23.97
TBVpS15.61
PEG (NY)N/A
PEG (5Y)2.16
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.48% | ||
| ROE | 9.61% | ||
| ROCE | 5.05% | ||
| ROIC | 3.98% | ||
| ROICexc | 3.99% | ||
| ROICexgc | 4.59% | ||
| OM | 38.74% | ||
| PM (TTM) | 27.62% | ||
| GM | 84.82% | ||
| FCFM | N/A |
ROA(3y)3.07%
ROA(5y)2.85%
ROE(3y)8.9%
ROE(5y)8.22%
ROIC(3y)3.45%
ROIC(5y)3.32%
ROICexc(3y)3.45%
ROICexc(5y)3.32%
ROICexgc(3y)4.04%
ROICexgc(5y)3.94%
ROCE(3y)4.42%
ROCE(5y)4.24%
ROICexcg growth 3Y-0.42%
ROICexcg growth 5Y1.31%
ROICexc growth 3Y0.8%
ROICexc growth 5Y-1.43%
OM growth 3Y4.21%
OM growth 5Y-1.02%
PM growth 3Y7.49%
PM growth 5Y2.49%
GM growth 3Y1.93%
GM growth 5YN/A
F-Score6
Asset Turnover0.13
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.14 | ||
| Debt/FCF | N/A | ||
| Debt/EBITDA | 5.89 | ||
| Cap/Depr | 355.49% | ||
| Cap/Sales | 59.6% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 70.56% | ||
| Profit Quality | N/A | ||
| Current Ratio | 0.73 | ||
| Quick Ratio | 0.58 | ||
| Altman-Z | 1 |
F-Score6
WACC7.41%
ROIC/WACC0.54
Cap/Depr(3y)346.54%
Cap/Depr(5y)341.43%
Cap/Sales(3y)56.19%
Cap/Sales(5y)56.01%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)15.63%
EPS 3Y8.62%
EPS 5Y7.8%
EPS Q2Q%52%
EPS Next Y-0.05%
EPS Next 2Y3.14%
EPS Next 3Y4.61%
EPS Next 5Y4.82%
Revenue 1Y (TTM)20.7%
Revenue growth 3Y3.56%
Revenue growth 5Y18.58%
Sales Q2Q%18.3%
Revenue Next Year8.93%
Revenue Next 2Y7.47%
Revenue Next 3Y7.18%
Revenue Next 5Y6.38%
EBIT growth 1Y31.8%
EBIT growth 3Y7.93%
EBIT growth 5Y17.37%
EBIT Next Year58.21%
EBIT Next 3Y23.9%
EBIT Next 5Y18.18%
FCF growth 1Y-25.63%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y13.7%
OCF growth 3Y6.12%
OCF growth 5Y17.88%