ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Essential Utilities's annualized return on capital (ROC %) for the quarter that ended in Mar. 2026 was 6.32%.
As of today (2026-06-28), Essential Utilities's WACC % is 4.61%. Essential Utilities's ROC % is 4.54% (calculated using TTM income statement data).
Essential Utilities earns returns that do not match up to its cost of capital. It will destroy value as it grows.
Essential Utilities (MEX:WTRG) ROC % Explanation
ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.
There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.
Why is ROC % important?
Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.
As of today, Essential Utilities's WACC % is 4.61%. Essential Utilities's ROC % is 4.54% (calculated using TTM income statement data).
Essential Utilities earns returns that do not match up to its cost of capital. It will destroy value as it grows.
Be Aware
Like ROE % and ROA %, ROC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.
Essential Utilities ROC % Related Terms
Essential Utilities ROC % Historical Data
* Premium members only.
The historical data trend for Essential Utilities's ROC % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Note:
The Operating Income data used here is four times the quarterly (Mar. 2026) data.
The tax rate is limited to between 0% and 100%.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Essential Utilities (MEX:WTRG) has a ROC % of 6.32% as of Mar. 2026. Return on capital is the ratio of current-period net income to average two-period capital. View historical data on Essential Utilities and its competitors.
Is Essential Utilities' ROC % too high?
Essential Utilities' current ROC % is 6.32%. The Utilities - Regulated industry median ROC % is 4.18. Essential Utilities' value of 6.32% is 51.2% above this industry median. Overall, Essential Utilities has a GF Score™ of 74/100, reflecting its overall financial health beyond just this single metric.
How does Essential Utilities' ROC % compare to AWR and CWT?
Essential Utilities' ROC % of 6.32% can be compared against companies in the Utilities - Regulated industry. The industry median ROC % is 4.18. Essential Utilities' value of 6.32% is 51.2% above this benchmark. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good ROC % for an Utilities - Regulated company?
The median ROC % among Utilities - Regulated companies is 4.18, based on 503 companies in the industry. Companies in the top quartile (top 25%) have a ROC % significantly above this median, while those in the bottom quartile fall well below. However, ROC % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Essential Utilities's current ROC % of 6.32% is 51.2% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high ROC % mean?
A high ROC % can signal that a stock is expensive relative to its fundamentals. Return on capital is the ratio of current-period net income to average two-period capital. View historical data on Essential Utilities and its competitors. For the Utilities - Regulated industry, the median ROC % is 4.18 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Essential Utilities's current ROC % is 6.32%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Essential Utilities stock overvalued right now?
Essential Utilities (MEX:WTRG) has a current ROC % of 6.32%. The current ROC % is 6.32% and 51.2% above the Utilities - Regulated industry median of 4.18. Essential Utilities' overall GF Score™ is 74/100 with 7 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is ROC % calculated?
ROC % is calculated from a company's financial statements. For Essential Utilities (MEX:WTRG), the current ROC % is 6.32% as of Mar. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Essential Utilities is a Pennsylvania-based holding company for US water, wastewater, and natural gas distribution utilities. The company's water business serves 3 million people in eight states. Its largest service territory is in Pennsylvania, primarily suburban Philadelphia. Its Peoples subsidiary serves more than 740,000 gas distribution customers in Pennsylvania and Kentucky. It completed the sale of its West Virginia gas utility and the bulk of its nonregulated assets in 2024. Essential shareholders would own a 31% stake in American Water Works if the proposed all-stock merger closes in 2027.
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