Essential Utilities Inc. WTRG announced lower common equity needs for 2023. In addition to the equity already raised under the company’s at the market (ATM) program, WTRG now anticipates to issue more than $300 million of common stock in 2023, subject to market circumstances. The company previously expected to issue $500 million worth of equity and/or equity-linked securities this year.
Rationale Behind the Move
This additional stock offering will aid the company in meeting its 2023 capital investment goals and fund signed acquisitions in its municipal buyout program.
Essential Utilities invested nearly $243.7 million in the first quarter of 2023 to improve its regulated water and natural gas infrastructure systems and enhance customer service across its operations. The company plans to invest $3.3 billion during 2023-2025 to further strengthen its operations.
The U.S. water and wastewater industry is quite fragmented and the larger utilities are acquiring smaller ones to expand operations, make essential upgrade in the infrastructure and provide high-quality services to customers.
Since 2015, WTRG has been expanding utility operations through several water and wastewater acquisitions, adding 118,000 customers to its customer base. WTRG completed three acquisitions in 2022 that added another 23,175 customers.
Essential Utilities expects to leverage the ATM for a major portion of the $300 million in new equity.
Price Performance
In the past month, shares of the company have risen 0.6% against the industry’s 37% decline.
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Zacks Rank & Stocks to Consider
Essential Utilities currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the same sector are Consolidated Water Co. Ltd. CWCO, sporting Zacks Rank #1 (Strong Buy), and California Water Service Group CWT and NextEra Energy, Inc. NEE, both carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Consolidated Water’s long-term (three- to five-year) earnings growth rate is 8%. The Zacks Consensus Estimate for 2023 earnings per share (EPS) indicates a year-over-year increase of 79.6%.
The Zacks Consensus Estimate for California Water’s 2023 EPS indicates a year-over-year improvement of 4.5%. The same for sales indicates a year-over-year increase of 1.14%.
NextEra Energy’s long-term earnings growth rate is 8.38%. The Zacks Consensus Estimate for 2023 EPS implies year-over-year growth of 7.2%.
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