Essential Utilities Q3 revenue rises on regulatory recoveries, higher gas costs

Overview

• U.S. water and gas utility's Q3 adjusted EPS beat analyst expectations

• Q3 revenue rose 6.6% yr/yr, driven by regulatory recoveries and purchased gas costs

• Company continues progress on proposed merger with American Water

Outlook

• Essential Utilities expects to invest $1.7 bln in infrastructure in 2026

• Company anticipates closing merger with American Water in Q1 2027

• Operations and maintenance expenses for the full year expected to be in line with historic norms

Result Drivers

• REGULATORY RECOVERIES - Co said regulatory recoveries were a main driver of revenue growth in both water and natural gas segments

• PURCHASED GAS COSTS - Higher purchased gas costs contributed to increased revenues in natural gas segment

• INSURANCE RECOVERIES - Lower operations and maintenance expenses were partly due to insurance recoveries recognized in the quarter

Company press release:

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 3 "strong buy" or "buy", 3 "hold" and 1 "sell" or "strong sell"

• The average consensus recommendation for the water & related utilities peer group is "buy."

• Wall Street's median 12-month price target for Essential Utilities Inc is $39.00, about 11.4% below its November 3 closing price of $44.04

• The stock recently traded at 19 times the next 12-month earnings vs. a P/E of 17 three months ago

Reuters Recommended Reads

• Nov 3 - Canada's Fortis Q3 profit beats estimates on rate base growth; raises dividend

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• Nov 3 - NextEra, Dominion accept most Virginia merger conditions

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(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)