A month has gone by since the last earnings report for Essential Utilities (WTRG). Shares have lost about 2.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Essential Utilities due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Essential Utilities Q1 Earnings Lag, Revenues Surpass Estimates
Essential Utilities Inc. reported first-quarter 2026 operating earnings per share (EPS) of 83 cents, which lagged the Zacks Consensus Estimate of $1.01 by 17.82%. The bottom line decreased 19.41% from $1.03 in the year-ago quarter.
WTRG’s first-quarter GAAP earnings were 79 cents compared with $1.03 reported in the year-ago quarter. The difference between GAAP and operating earnings was due to the impact of merger-related expenses incurred in the quarter.
Revenues of WTRG
Operating revenues of $862 million surpassed the Zacks Consensus Estimate of $768 million by 12.17%. The top line rose nearly 10% from the prior-year quarter’s $783.6 million. The improvement in total revenues was due to additional revenues from regulatory recoveries and purchased gas costs.
WTRG’s Segment Details
Essential Utilities’ water segment reported revenues for the quarter of $323 million, an increase of 7.4% compared to $300.8 million in the first quarter of 2025. The year-over-year improvement was due to regulatory recoveries and increased volume.
WTRG’s regulated natural gas segment reported quarterly revenues of $529.4 million, up from $470.8 million in the first quarter of 2025, primarily driven by higher purchased gas costs, increased regulatory recoveries and the impact of weather normalization adjustments.
Highlights of WTRG’s Q1 Release
Total operating expenses amounted to $551.1 million, up 23.9% from the year-ago figure of $444.7 million due to increases in purchased gas costs, and higher operation and maintenance expenses than the previous year period.
Operating income totaled $310.6 million, down 8.4% year over year. The year-over-year decline was due to an increase in operating expenses.
Interest expenses increased 6.33% to $87.3 million from $79.3 million in the prior-year quarter.
The company continues to expand its operations through acquisitions and organic initiatives. The pending acquisition, if closed, can add more than 200,000 customers to Essential Utilities’ customer base.
So far in 2026, the company’s regulated water segment has secured rate awards and infrastructure surcharges expected to increase annual revenues by $5.7 million across Illinois, Indiana, Pennsylvania and Ohio. Its regulated natural gas segment also received rate awards and infrastructure surcharges in Kentucky and Pennsylvania, projected to add $9.4 million in annual revenues.
WTRG’s Financial Highlights
Current assets amounted to $622.6 million as of March 1, 2026, compared with $610.4 million as of Dec. 31, 2025.
Long-term debt was $8.36 billion as of March 31, 2026, up from $8.11 billion as of Dec. 31, 2025.
Essential Utilities invested nearly $269 million during the first three months of 2026 to strengthen its regulated water and natural gas infrastructure systems and improve customer service across its operations.
Essential Utilities is on track to invest $1.7 billion in infrastructure in 2026.
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 overwhelmingly approved the merger-related proposals. Essential Utilities has also secured key regulatory approvals, including clearance from the Kentucky Public Utility Commission on April 20, 2026. The merger remains on schedule to close in the first quarter of 2027.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in estimates revision.
The consensus estimate has shifted 5.56% due to these changes.
VGM Scores
Currently, Essential Utilities has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Following the exact same course, the stock has a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Interestingly, Essential Utilities has a Zacks Rank #3 (Hold). We expect an in-line 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, California Water Service Group (CWT), a stock from the same industry, has gained 3.7%. The company reported its results for the quarter ended March 2026 more than a month ago.
California Water Service Group reported revenues of $214.57 million in the last reported quarter, representing a year-over-year change of +5.2%. EPS of $0.07 for the same period compares with $0.22 a year ago.
California Water Service Group is expected to post earnings of $0.79 per share for the current quarter, representing a year-over-year change of +11.3%. Over the last 30 days, the Zacks Consensus Estimate has changed +1.3%.
California Water Service Group has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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Essential Utilities Inc. (WTRG): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).