ESSENTIAL UTILITIES INC (NYSE:WTRG) reported second-quarter adjusted earnings of $0.38 per share, essentially in line with the $0.379 analysts expected, while revenue of $530.9 million came in below the $562.3 million consensus estimate. In after-market trading, shares were indicated about 1.3% higher, a positive response that suggests investors are looking through the revenue shortfall to the company's earnings stability, dividend increase and merger progress.
Market reaction
The stock rose roughly 1.3% in extended trading after the report. That move comes after a 2.8% decline over the past week; the shares remain up about 1.6% over the past two weeks and 1.2% over the past month. The after-market tone implies that the inline EPS result and the maintained merger timeline carried more weight than the softer-than-expected revenue line.
Quarterly results vs consensus
Essential's GAAP net income for the second quarter was $105.7 million, or $0.37 per diluted share, compared with $107.8 million, or $0.38 per diluted share, a year earlier. On a non-GAAP basis, adjusted EPS of $0.38 excludes $1.2 million of merger-related expenses, leaving the result effectively flat with the consensus estimate of $0.379.
Key metrics for the quarter:
- Adjusted EPS: $0.38 vs. $0.379 estimated, a deviation of less than 1%; inline with expectations
- Revenue: $530.9 million vs. $562.3 million estimated, about 5.6% below consensus
- Revenue growth: 3.0% year over year, helped by regulatory recoveries and purchased gas costs
- Regulated water revenue: $357.5 million, up 7.6%
- Regulated natural gas revenue: $169.3 million, down from $177.3 million
A large part of the year-over-year revenue drag came from the natural gas segment, where warm weather reduced usage. Operations and maintenance expenses rose 3.5% to $153.6 million, though the increase was 2.6% when merger-related costs are excluded. Higher employee-related and production costs were partly offset by lower insurance, bad debt and customer assistance expenses.
Dividend and capital spending
Essential's board raised the quarterly dividend by 5.25% to $0.3606 per share, continuing a record of more than 80 consecutive years of quarterly payments. Capital spending reached roughly $662.2 million in the first half of 2026, and management reaffirmed its plan to invest $1.7 billion in regulated infrastructure this year.
The company also remains active in small municipal acquisitions. It completed a Texas wastewater acquisition in May and has signed purchase agreements for additional systems in Pennsylvania, Texas, North Carolina and New Jersey, including the DELCORA sewer system in the Philadelphia suburbs. The active acquisition pipeline represents about 400,000 potential customers.
Merger and outlook
Essential continues to expect the proposed merger with American Water to close in the first quarter of 2027. Regulatory approvals have been obtained in Kentucky, Ohio and Virginia, and approximately 95% of voted shares were cast in favor of the transaction at the February shareholder meeting. Merger-related costs totaled $17.5 million in the first half of 2026.
The company did not provide a specific 2026 EPS target in the release. Its long-term guidance calls for adjusted EPS growth of 5% to 7% from the 2024 adjusted EPS base of $1.97 through 2027. That framework is broadly consistent with the current consensus full-year estimate near $2.27, though the exact comparison is sensitive to rate case outcomes and the timing of the merger close. Investors should also note that the revenue miss was driven partly by weather and cost-recovery mechanics, which can be volatile from quarter to quarter.
For readers who want to examine the company's historical earnings patterns in more detail, this earnings summary page provides additional data. Future consensus estimates and projections are available on the forecast page.
Disclaimer: This article is for informational and educational purposes only and does not constitute financial advice or a recommendation to buy or sell any security. Always conduct your own research and consider your risk tolerance before making investment decisions.
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Essential Utilities (NYSE:WTRG) Posts Inline EPS, Revenue Misses, but Shares Rise on Dividend Hike and Merger Progress
ESSENTIAL UTILITIES INC (NYSE:WTRG) reported second-quarter adjusted earnings of $0.38 per share, essentially in line with the $0.379 analysts expected, while revenue of $530.9 million came in below the $562.3 million consensus estimate. In after-market trading, shares were indicated about 1.3% higher, a positive response that suggests investors are looking through the revenue shortfall to the company's earnings stability, dividend increase and merger progress.
Market reaction
The stock rose roughly 1.3% in extended trading after the report. That move comes after a 2.8% decline over the past week; the shares remain up about 1.6% over the past two weeks and 1.2% over the past month. The after-market tone implies that the inline EPS result and the maintained merger timeline carried more weight than the softer-than-expected revenue line.
Quarterly results vs consensus
Essential's GAAP net income for the second quarter was $105.7 million, or $0.37 per diluted share, compared with $107.8 million, or $0.38 per diluted share, a year earlier. On a non-GAAP basis, adjusted EPS of $0.38 excludes $1.2 million of merger-related expenses, leaving the result effectively flat with the consensus estimate of $0.379.
Key metrics for the quarter:
A large part of the year-over-year revenue drag came from the natural gas segment, where warm weather reduced usage. Operations and maintenance expenses rose 3.5% to $153.6 million, though the increase was 2.6% when merger-related costs are excluded. Higher employee-related and production costs were partly offset by lower insurance, bad debt and customer assistance expenses.
Dividend and capital spending
Essential's board raised the quarterly dividend by 5.25% to $0.3606 per share, continuing a record of more than 80 consecutive years of quarterly payments. Capital spending reached roughly $662.2 million in the first half of 2026, and management reaffirmed its plan to invest $1.7 billion in regulated infrastructure this year.
The company also remains active in small municipal acquisitions. It completed a Texas wastewater acquisition in May and has signed purchase agreements for additional systems in Pennsylvania, Texas, North Carolina and New Jersey, including the DELCORA sewer system in the Philadelphia suburbs. The active acquisition pipeline represents about 400,000 potential customers.
Merger and outlook
Essential continues to expect the proposed merger with American Water to close in the first quarter of 2027. Regulatory approvals have been obtained in Kentucky, Ohio and Virginia, and approximately 95% of voted shares were cast in favor of the transaction at the February shareholder meeting. Merger-related costs totaled $17.5 million in the first half of 2026.
The company did not provide a specific 2026 EPS target in the release. Its long-term guidance calls for adjusted EPS growth of 5% to 7% from the 2024 adjusted EPS base of $1.97 through 2027. That framework is broadly consistent with the current consensus full-year estimate near $2.27, though the exact comparison is sensitive to rate case outcomes and the timing of the merger close. Investors should also note that the revenue miss was driven partly by weather and cost-recovery mechanics, which can be volatile from quarter to quarter.
For readers who want to examine the company's historical earnings patterns in more detail, this earnings summary page provides additional data. Future consensus estimates and projections are available on the forecast page.
Disclaimer: This article is for informational and educational purposes only and does not constitute financial advice or a recommendation to buy or sell any security. Always conduct your own research and consider your risk tolerance before making investment decisions.
Read full article here »