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A Fresh Look at Essential Utilities (WTRG) Valuation After Upbeat Earnings and Raised Guidance

Simply Wall St·11/12/2025 08:29:34
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Essential Utilities (WTRG) just delivered a solid update, reporting higher sales and net income for both its third quarter and nine-month results compared to last year. Management also raised its full-year earnings guidance due to recent non-recurring benefits, which caught investors’ attention.

See our latest analysis for Essential Utilities.

Essential Utilities’ upbeat earnings and guidance have helped the stock regain momentum, with a share price return of 9.5% so far in 2025. While the 1-year total shareholder return is a more modest 3.8%, recent positive surprises show sentiment may be shifting after a sluggish few years.

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With the latest jump in guidance and a steadily improving earnings track record, investors may be asking themselves if Essential Utilities is currently undervalued or if the recent gains indicate that future growth is already reflected in the price.

Most Popular Narrative: 9.7% Undervalued

With Essential Utilities’ fair value set nearly 10% above its latest close price, the dominant narrative sees more upside than current market levels suggest. Here is the catalyst driving expectations beyond the status quo.

Ongoing and anticipated infrastructure investment, $1.4 billion planned for 2025 and a multi-year CAGR of 6 to 8% in regulated rate base, positions Essential Utilities to capitalize on expanding, long-term demand for water and wastewater services due to population growth and urbanization, supporting reliable revenue and cash flow growth.

Read the complete narrative.

Curious what makes this bullish valuation tick? The core of the narrative leans on growth forecasts and a profit outlook comparable to top-rated utilities. Interested in the ambitious targets that underpin a sizable fair value premium? Click to uncover the details that analysts are building into this optimistic scenario.

Result: Fair Value of $43.71 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rising regulatory scrutiny on rate increases and slower customer growth in key regions could present challenges for Essential Utilities as it works to deliver on bullish forecasts.

Find out about the key risks to this Essential Utilities narrative.

Build Your Own Essential Utilities Narrative

If you see the outlook differently or would rather dig into the numbers yourself, you can shape your own view of Essential Utilities in just a few minutes. Start with Do it your way.

A great starting point for your Essential Utilities research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.