It has been about a month since the last earnings report for Essential Utilities (WTRG). Shares have added about 2.5% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Essential Utilities due for a pullback? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent drivers for Essential Utilities Inc. before we dive into how investors and analysts have reacted as of late.
Essential Utilities Q4 Earnings Beat Estimates, Revenues Rise Y/Y
Essential Utilities Inc. reported fourth-quarter 2025 operating earnings per share (EPS) of 47 cents, which beat the Zacks Consensus Estimate of 36 cents by 30.56%. The bottom line decreased 29.85% from 67 cents in the year-ago quarter.
WTRG’s fourth-quarter earnings are positively impacted by the increase in rate and natural gas volume, reflecting stronger customer demand. These benefits are more than offset by growth in taxes, along with increased operations and maintenance expenses.
Revenues of WTRG
Operating revenues of $699.1 million surpassed the Zacks Consensus Estimate of $589 million by 18.69%. The top line rose 15.67% from the prior-year quarter’s $604.4 million.
WTRG reported total revenues of $2.47 billion in 2025, marking an 18.62% rise from $2.09 billion in 2024.
WTRG’s Segment Details
Essential Utilities’ regulated water segment generated $329.4 million in revenues, up 8% from $305 million in the fourth-quarter of 2024. The primary drivers of this growth were higher water and wastewater rates.
WTRG’s regulated natural gas segment reported quarterly revenues of $361.3 million, marking a 23% increase from $293.7 million in the fourth quarter of 2024.
Highlights of WTRG’s Q4 Release
Operation and maintenance expenses amounted to $200.2 million, up 22.45% from the year-ago figure of $163.5 million due to increases in purchased gas costs, rates across both the water and gas businesses, and gas volume.
Operating income totaled $227 million, up 0.17% year over year.
Interest expenses increased 7.11% to $84.9 million from $79.3 million in the prior-year quarter.
The company continues to expand its operations through acquisitions and organic initiatives. During 2025, the company added 12,700 customers through organic growth, and three acquisitions of water and wastewater systems that were completed in the same period. Since 2015, through closed acquisition, the company added nearly 135,000 wastewater customers.
The new water and natural gas rates approval received by the company in 2025 increased annual revenues by $92.6 million and $8.9 million, respectively.
The new water and gas rate approvals received by the company in the first two months of 2026 are expected to increase annual revenues by $4.6 million and $7.6 million, respectively.
WTRG’s Financial Highlights
Current assets amounted to $610.4 million as of Dec. 31, 2025, compared with $485.9 million as of Dec. 31, 2024.
Long-term debt was $8.11 billion as of Dec. 31, 2025, up from $7.37 billion as of Dec. 31, 2024.
The company invested $1.4 billion in 2025 to improve its regulated water and natural gas infrastructure systems and enhance operations and customer service.
Latest Update on the Merger With American Water Works
Essential Utilities is moving forward with its previously announced merger deal with American Water Works by securing the necessary regulatory consents and approvals. During 2025, the company submitted applications for regulatory clearance in the applicable states.
On Feb. 10, 2026, shareholders of both companies voted in favor of the proposed merger. The merger is expected to close by the end of the first quarter of 2027.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, Essential Utilities has a poor Growth Score of F, a score with the same score on the momentum front. Charting a somewhat similar path, the stock has a score of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Essential Utilities has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Essential Utilities is part of the Zacks Utility - Water Supply industry. Over the past month, American States Water (AWR), a stock from the same industry, has gained 1.6%. The company reported its results for the quarter ended December 2025 more than a month ago.
American States Water reported revenues of $164.28 million in the last reported quarter, representing a year-over-year change of +14.8%. EPS of $0.74 for the same period compares with $0.69 a year ago.
For the current quarter, American States Water is expected to post break-even earnings per share, indicating a change of 0% from the year-ago quarter. The Zacks Consensus Estimate has changed 0% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for American States Water. Also, the stock has a VGM Score of C.
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This article originally published on Zacks Investment Research (zacks.com).