We reaffirm our $42 fair value estimate for Essential Utilities after the US Environmental Protection Agency issued its final rule with limits for per- and polyfluoroalkyl substances, or PFAS, in water utility systems, including Essential's subsidiaries. We are reaffirming our narrow moat rating.
Constructive regulation allows Essential to raise rates through surcharges or rate cases to reduce regulatory lag and enhance cash flow available to pay the dividend and invest in growth projects.
Essential Utilities paid a peak market price for Peoples, which will probably drag on consolidated returns for many years.
|
Metric
|
WTRG
|
AWK
|
ES
|
|---|---|---|---|
Price/Earnings (Normalized) | 19.95 | 25.00 | 14.02 |
Price/Book Value | 1.66 | 2.37 | 1.49 |
Price/Sales | 4.68 | 5.44 | 1.77 |
Price/Cash Flow | 12.67 | 12.80 | 10.10 |
|
Metric
|
WTRG
|
AWK
|
ES
|
|---|---|---|---|
Quick Ratio | 0.31 | 0.49 | 0.27 |
Current Ratio | 0.62 | 0.65 | 0.67 |
Interest Coverage | 2.51 | 3.44 | 0.57 |
|
Metric
|
WTRG
|
AWK
|
ES
|
|---|---|---|---|
Return on Assets (Normalized) | 3.05% | 3.24% | 2.77% |
Return on Equity (Normalized) | 8.71% | 10.12% | 9.90% |
Return on Invested Capital (Normalized) | 5.70% | 5.82% | 5.25% |
|
Ticker
|
Name
|
Morningstar Rating for Stocks
|
Capital Allocation
|
Economic Moat
|
Market Cap
|
|---|---|---|---|---|---|
AWK
| American Water Works Co Inc | Mrtrzlxwx | Zrxtz | $22.9 Bil | |
SBS
| Companhia De Saneamento Basico Do Estado De Sao Paulo ADR | — | Sqx | $10.5 Bil | |
STRNY
| Severn Trent PLC ADR | — | Ypshgh | $9.1 Bil | |
SVTRF
| Severn Trent PLC | — | Chmfvn | $9.1 Bil | |
UUGWF
| United Utilities Group PLC Class A | Fgzxbwqpx | Vvcn | $8.8 Bil | |
UUGRY
| United Utilities Group PLC ADR | Szbxrxnt | Tsvb | $8.8 Bil | |
GGDVF
| Guangdong Investment Ltd | — | Gxnn | $2.9 Bil | |
GGDVY
| Guangdong Investment Ltd ADR | — | Ybp | $2.9 Bil | |
CWT
| California Water Service Group | — | Wfltm | $2.6 Bil |
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