Reasons to Add Essential Utilities (WTRG) to Your Portfolio
Essential Utilities Inc.’s WTRG steady capital investment, strategic acquisitions, customer additions and organic growth are boosting its performance.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a strong investment pick at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Growth Projections
The Zacks Consensus Estimate for 2020 earnings per share and revenues is pegged at $1.56 and $1.5 billion, suggesting an increase of 6.1% and 68.2%, respectively, from the year-ago quarter.
The consensus mark for 2021 earnings and revenues is pegged at $1.66 and $1.86 billion, respectively. The bottom- and top-line estimates suggest a 6.4% and 24.4% year-over-year increase, respectively.
Regular Investments
Essential Utilities makes consistent investment to upgrade and maintain the existing infrastructure for providing 24x7 reliable services to the expanding customer base. The company aims to invest more than $2.8 billion over the 2020-2022 time period to rehabilitate and strengthen water as well as gas infrastructure.
Accretive Acquisitions
Essential Utilities is consistently making acquisitions that are boosting the bottom line. Since 2015, the company has closed 57 acquisitions, which added 48,000 new connections and expanded its rate base by nearly $237 million. The company expects to generate $5 million in incremental earnings for every $100 million in rate base expansion.
It has already closed two acquisitions in the year-to-date period and the other two pending acquisitions, when completed, will expand the rate base by nearly $334 million.
Surprise History & Long-Term Earnings Growth
Essential Utilities’ trailing four-quarter positive earnings surprise is 3.2%, on average.
Its long-term (three to five years) earnings growth is currently pegged at 5.9%.
Price Performance
In the past 12-month period, the stock has gained 3.3% compared with the industry’s growth of 2.8%.
Other Stocks to Consider
Other top-ranked stocks in the Zacks Utilities sector include NextEra Energy Inc. NEE, PNM Resources Inc. PNM and CMS Energy Corporation CMS, each carrying a Zacks Rank of 2.
NextEra Energy, PNM Resources and CMS Energy delivered average positive earnings surprise of 2.4%, 1.2% and 0.8%, respectively, in the last four quarters.
Long-term earnings growth for NextEra Energy, PNM Resources and CMS Energy is currently projected at 7.9%, 6.2% and 6.9%, respectively.
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CMS Energy Corporation (CMS) : Free Stock Analysis Report
NextEra Energy, Inc. (NEE) : Free Stock Analysis Report
PNM Resources, Inc. Holding Co. (PNM) : Free Stock Analysis Report
Essential Utilities Inc. (WTRG) : Free Stock Analysis Report
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