Introduction#
Eversource Energy (ES has recently undergone pivotal strategic moves that underscore a broader realignment towards financial strength and focused growth in its regulated utility operations. With a market capitalization of approximately $24.14 billion and a current stock price near $65.71 (down -0.60% intraday), the company’s recent divestitures and capital investment plans signal a shift that investors should closely monitor.
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Strategic Divestitures: Sharpening Focus and Strengthening the Balance Sheet#
In early 2025, Eversource completed the sale of its Aquarion Water subsidiary for roughly $2.4 billion, which included $1.6 billion in cash and the elimination of around $800 million in net debt. This transaction represents a significant step in reducing leverage and improving the company's credit metrics, particularly important given the previously elevated debt-to-equity ratio of 1.92 reported in March 2025. The proceeds from this sale are earmarked to enhance financial flexibility and lower borrowing costs, which is critical for a capital-intensive utility company.
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Complementing this move, Eversource exited the offshore wind sector by selling its wind assets to Global Infrastructure Partners (GIP) for approximately $745 million. This divestiture not only brings in additional cash but also allows Eversource to concentrate on its core regulated utility business, a segment that historically delivers more predictable cash flows and regulatory support.
While these sales resulted in reported losses—approximately $300 million from Aquarion and $520 million from offshore wind assets in 2024—the long-term financial benefits include enhanced balance sheet resilience and a more focused investment approach aligned with regulated utility growth.
Financial Performance and Profitability Trends#
Eversource's financial results for the fiscal year ended December 31, 2024, reveal a notable turnaround from the prior year. Revenue remained stable at $11.9 billion, essentially flat compared to 2023's $11.91 billion (-0.08% growth), but net income swung from a loss of $442 million in 2023 to a profit of $812 million in 2024, reflecting a +283.53% improvement. This earnings recovery was accompanied by a gross profit margin contraction to 31.12% from 40.69% the prior year, likely reflecting divestiture-related impacts and cost structure adjustments.
Operating income grew to $2.71 billion (+12.9% year-over-year), and operating margin improved to 22.74% from 20.14%. These gains underscore operational efficiency improvements and successful cost management despite the restructuring.
The company’s EBITDA was reported at $4.13 billion for 2024, a substantial increase from $1.4 billion in 2023, contributing to a stronger cash flow position.
Cash Flow and Capital Allocation#
Operating cash flow strengthened to $2.16 billion in 2024, up from $1.65 billion in 2023 (+31.2% growth), reflecting better earnings quality and working capital management. However, free cash flow remained negative at -$2.32 billion due to substantial capital expenditures totaling $4.48 billion, emphasizing the company’s aggressive investment posture in infrastructure and modernization.
Dividend payments totaled approximately $1 billion, maintaining a payout ratio near 123%, signaling a commitment to shareholder returns despite the high capital expenditure environment. The company’s dividend yield stands at an attractive 4.47%, appealing to income-focused investors.
Balance Sheet and Financial Health#
Eversource's total assets grew to $59.59 billion in 2024, with $40.99 billion in net property, plant, and equipment—a clear indication of its capital-intensive utility operations. Total liabilities increased to $44.4 billion, reflecting the company's substantial debt load, with net debt rising to $29.09 billion.
The current ratio remains at 0.75x, consistent with utility sector norms where working capital is less emphasized due to regulated cash flows. The debt-to-equity ratio stands at 1.32x (or 132%), underscoring moderate leverage levels typical for utilities but necessitating ongoing attention to debt management.
Market Valuation and Analyst Estimates#
Despite recent earnings improvement, Eversource trades at a trailing P/E ratio of 28.57x, which may appear elevated but aligns with the sector’s valuation for stable regulated utilities. Forward P/E estimates show a downward trend, from 14.21x in 2025 to 11.28x by 2029, indicating analyst expectations of earnings growth and valuation normalization.
Price-to-book ratio is modest at 1.1x, reflecting a relatively conservative market valuation relative to the company’s book value.
Analyst Revenue and Earnings Growth Projections#
Analysts forecast revenue growth at a compound annual growth rate (CAGR) of 3.81% over the next several years, with earnings per share expected to grow at approximately 5.95% CAGR. By 2029, revenue estimates reach around $15.33 billion, with EPS projected near $5.99, nearly doubling from current levels.
| Year | Estimated Revenue (B USD) | Estimated EPS | Forward P/E |
|---|---|---|---|
| 2025 | 13.20 | 4.75 | 14.21x |
| 2026 | 13.50 | 5.02 | 13.84x |
| 2027 | 13.87 | 5.32 | 13.21x |
| 2028 | 14.92 | 5.68 | 11.89x |
| 2029 | 15.33 | 5.99 | 11.28x |
Competitive Landscape and Sector Trends#
Operating primarily in the regulated utility sector across New England states such as Connecticut, Massachusetts, and New Hampshire, Eversource benefits from a stable regulatory environment that supports cost recovery and fair returns on infrastructure investments. This regulatory backdrop is critical in mitigating business risks and ensuring predictable cash flows.
The company’s exit from non-core sectors like water utilities and offshore wind reflects a strategic pivot to concentrate on regulated electric and gas operations, which historically exhibit lower volatility and higher predictability.
Moreover, Eversource's $24.2 billion capital investment plan targets grid modernization, renewable energy integration, and infrastructure expansion, aligning with broader industry trends favoring decarbonization and resilience. This positions the company competitively to capture emerging growth opportunities driven by policy incentives and increasing demand for reliable, clean energy.
What Does This Mean For Investors?#
Eversource Energy’s recent strategic divestitures have materially improved its financial flexibility, allowing the company to focus on its core regulated utility operations. The improved earnings profile and robust capital investment plan support a sustainable dividend, currently yielding 4.47%, with the potential for growth aligned with earnings expansion.
Investors should note the relatively high payout ratio of 123%, which underscores the importance of monitoring free cash flow trends and capital expenditure discipline going forward. However, the company's consistent operational improvements and regulatory support provide a strong foundation for dividend reliability.
The valuation metrics suggest that Eversource remains somewhat undervalued relative to its long-term earnings growth prospects, especially given the downward trajectory of forward P/E multiples and steady revenue and EPS growth forecasts.
Key Financial Metrics Summary#
| Metric | 2024 Actual | 2023 Actual | % Change |
|---|---|---|---|
| Revenue (B USD) | 11.9 | 11.91 | -0.08% |
| Net Income (MM USD) | 812 | -442 | +283.53% |
| Operating Income (B USD) | 2.71 | 2.4 | +12.9% |
| Gross Profit Margin | 31.12% | 40.69% | -9.57 pp |
| EBITDA (B USD) | 4.13 | 1.4 | +195.7% |
| Dividend Yield | 4.47% | 4.47% | 0% |
| Debt to Equity Ratio | 1.32x | 1.19x | +10.9% |
Conclusion#
Eversource Energy is navigating a significant strategic transition marked by targeted divestitures and a focused capital investment plan, enhancing its financial health and operational clarity. The company’s return to profitability, strong cash flow generation, and attractive dividend yield position it well within the regulated utility sector.
Investors prioritizing stable income and moderate growth should consider the implications of Eversource's strategic realignment, robust infrastructure investments, and evolving regulatory environment. The company’s disciplined capital allocation and improving financial metrics signal a potentially undervalued opportunity within the utility space.
For further detailed insights and continuous updates on Eversource Energy's financial performance and strategic initiatives, readers can refer to trusted sources such as Monexa AI, Business Wire, and Nasdaq.
Key Takeaways:#
- Eversource Energy's divestitures of Aquarion Water and offshore wind assets strengthen its balance sheet by reducing debt and focusing on core regulated utilities.
- The company reported a significant net income recovery in 2024, reversing the prior year's loss.
- Capital expenditures remain high, reflecting aggressive investments in grid modernization and renewable integration.
- Dividend yield is attractive at 4.47%, though payout ratio exceeds 120%, requiring monitoring of free cash flow trends.
- Forward earnings multiples suggest market recognition of earnings growth potential and possible undervaluation.
What Investors Are Asking:#
How sustainable is Eversource Energy's dividend? The dividend is supported by stable earnings and regulatory frameworks, but a payout ratio above 120% indicates the need for careful capital and cash flow management.
What is driving Eversource's strategic pivot? Divestitures from non-core assets aim to reduce debt and sharpen focus on regulated utilities, which offer more predictable returns.
How does Eversource's valuation compare to peers? Trading near a 28.57x trailing P/E but with forward P/E declining to around 11.28x by 2029, the stock appears undervalued relative to its growth trajectory.
