MeritValue

Essential Utilities, Inc.

WTRGdata completeness 88%19 fiscal years on file
The thesis, from the filings

Essential Utilities, Inc. earns about 5% on invested capital, but has diluted owners by 9% over 5 years — worth asking whether the growth reaches owners. The applicable estimate puts fair value near $18.4 a share.Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2021FY 2022FY 2023FY 2024FY 2025
Revenue$1.88B1$2.29B2$2.05B3$2.09B3$2.47B3
Net income$431.6M4$465.2M5$498.2M6$595.3M6$616.4M6
Operating cash flow$644.7M7$600.3M8$933.6M9$770.3M9$1.01B9
Capital expenditure—————
Free cash flow (derived)—————
Total debt$8.97B10$9.63B11$6.89B12$7.51B13$8.13B13
Cash & equivalents$10.6M14$11.4M15$4.61M16$9.16M17$34.8M17
Diluted shares258.2M262.9M267.7M274.4M280.6M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom).

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
$244.37
your share of equity
Profit it earned you last year
$21.96
Free cash flow it threw off
—
Debt you’d be carrying
$289.79

10 shares is a claim on $244.37 of net worth that earned you $21.96 last year, against $289.79 of debt.

iii. Is this a good business?
Moat signal · return on invested capital
5% avg · 5y
FY21 4%FY22 5%FY23 6%FY24 6%FY25 6%

It earned an average 5% on invested capital over 5 years. Compare that to what it costs to fund the business.

seeing a moat in the numbers →
Management signal · capital allocation
+9% shares · 5y

Share count is up 9% over 5 years — owners have been diluted. Worth asking what they got for it. Total debt has held roughly steady.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.1.0
DCF · Growth Exit 10Y
not applicable
only 0 years of FCF (need ≥3) — model not applicable
DCF · Growth Exit 5Y
not applicable
only 0 years of FCF (need ≥3) — model not applicable
Earnings Power Value
$18.4
assumptions (8)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • normalizedEarnings$498.2M
  • growthAssumed0.0%
Graham Number
$34.78
assumptions (1)
  • grahamMultiplier2250.0%

Different models answer different questions — which to trust when →

Sources — the receipts
  1. 10-K · period ending 2021-12-31 · accession 0001562762-24-000047 (Revenues)
  2. 10-K · period ending 2022-12-31 · accession 0001562762-25-000036 (Revenues)
  3. 10-K · period ending 2023-12-31 · accession 0000078128-26-000050 (Revenues)
  4. 10-K · period ending 2021-12-31 · accession 0001562762-24-000047 (NetIncomeLoss)
  5. 10-K · period ending 2022-12-31 · accession 0001562762-25-000036 (NetIncomeLoss)
  6. 10-K · period ending 2023-12-31 · accession 0000078128-26-000050 (NetIncomeLoss)
  7. 10-K · period ending 2021-12-31 · accession 0001562762-24-000047 (NetCashProvidedByUsedInOperatingActivities)
  8. 10-K · period ending 2022-12-31 · accession 0001562762-25-000036 (NetCashProvidedByUsedInOperatingActivities)
  9. 10-K · period ending 2023-12-31 · accession 0000078128-26-000050 (NetCashProvidedByUsedInOperatingActivities)
  10. 10-K · period ending 2021-12-31 · accession 0001562762-23-000064 (LongTermDebtNoncurrent)
  11. 10-K · period ending 2022-12-31 · accession 0001562762-24-000047 (LongTermDebtNoncurrent)
  12. 10-K · period ending 2023-12-31 · accession 0001562762-25-000036 (LongTermDebtNoncurrent)
  13. 10-K · period ending 2024-12-31 · accession 0000078128-26-000050 (LongTermDebtNoncurrent)
  14. 10-K · period ending 2021-12-31 · accession 0001562762-25-000036 (CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents)
  15. 10-K · period ending 2022-12-31 · accession 0001562762-24-000047 (CashAndCashEquivalentsAtCarryingValue)
  16. 10-K · period ending 2023-12-31 · accession 0001562762-25-000036 (CashAndCashEquivalentsAtCarryingValue)
  17. 10-K · period ending 2024-12-31 · accession 0000078128-26-000050 (CashAndCashEquivalentsAtCarryingValue)