WTRG's Investments, Rates and Strategic Acquisition Drive Growth

Essential Utilities WTRG benefits from systematic capital investment and new rates provide a clear path for revenue and earnings growth. Strategic mergers and acquisitions of municipal assets are expected to expand the customer base and boost performance.

This Zacks Rank #2 (Buy) company faces risks of water contamination and compliance with stricter regulations.

WTRG’s Tailwinds

Essential Utilities continues to benefit from systematic capital investments in infrastructure development and technological upgrades. These help to enhance operational efficiency, support service reliability and drive consistent financial performance and long-term growth. WTRG invested $1.4 billion in 2025 and plans to invest $1.7 billion in 2026 to upgrade water and natural gas systems.

In October 2025, American Water Works and Essential Utilities agreed to an all-stock merger that would create a leading U.S. regulated water utility, with an enterprise value of about $63 billion and operations in 17 states, subject to closing in early 2027.

The company is in the process of acquiring the wastewater assets of the Delaware County Regional Water Quality Control Authority for $276.5 million, which is expected to add 198,000 customers upon completion.

WTRG benefits from approved new rates in its regulated water and natural gas segments. As of Feb. 25, 2026, the company’s regulated water segment received rate awards or infrastructure surcharges in Illinois, Indiana and Ohio, resulting in an annualized revenue increase of $4.6 million. The regulated natural gas segment recorded an annual revenue rise of $7.8 million in Kentucky and Pennsylvania.

WTRG’s Headwinds

Water utilities face ongoing contamination risks despite strong safety measures. The contamination of water supplied could result in disruption of water services and lead to extra costs for water quality testing and monitoring, treatment of the contaminated source or the purchase of alternative water supplies.

Water utilities' operations are subject to compliance with several federal and state environmental laws, which can result in increased costs and operational complexities. Essential Utilities faces several legal disputes, and both asserted and unasserted claims in normal business operations. Any unfavorable outcomes of these contingencies could adversely impact financial performance.

Price Performance of WTRG

In the past three months, Essential Utilities shares have rallied 5.1% compared with the industry’s 8.6% growth.

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Other Stocks to Consider

Some other top-ranked stocks in the same sector are American States Water AWR, Exelon EXC and IDACORP IDA. All the stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term earnings growth rate of AWR, EXC and IDA (three to five years) is projected at 5.65%, 6.03% and 8.01%, respectively.

The Zacks Consensus Estimate for 2026 earnings of American States Water, Exelon and IDACORP is pegged at $3.59, $2.85 and $6.42 per share, suggesting year-over-year growth of 6.53%,2.89% and 8.81%, respectively.

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Exelon Corporation (EXC): Free Stock Analysis Report

IDACORP, Inc. (IDA): Free Stock Analysis Report

American States Water Company (AWR): Free Stock Analysis Report

Essential Utilities Inc. (WTRG): Free Stock Analysis Report

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