UTL: Initiating at Equal Weight, $56 PT

研报英文原文证据摘录

UTL: Initiating at Equal Weight, $56 PT

5%–7% (vs WF: 6.5%). We would

note that the 6.5% LT EPS growth falls 100bps below the group average of 7.4%. Management also

issued 2026 EPS guidance of $3.20-3.36, representing ~6% y/y growth at the midpoint. Earnings

are expected to remain seasonally weighted toward Q1 and Q4, accounting for 95% of annual EPS,

though largely insulated from weather volatility given the high levels of customers subject to revenue

decoupling mechanisms across the opcos.

Unitil’s growth outlook is underpinned by a $1.2 billion five-year capital investment plan (~20%

increase versus prior plan) and supporting LT rate base growth of 6.5-8.5%. We model $1.2B of

capital investments which translates into 8% Rate base growth, in line with the company. Importantly,

Unitil does not meaningfully benefit from large-load demand growth associated with data centers,

hyperscalers, or heavy industrial manufacturing due to its geographic footprint. Notably, the plan

excludes any contribution from pending Aquarion Water assets. Capital deployment is to remain

disciplined, with the majority of investment funded through operating cash flow and incremental

debt.

Unitil maintains a conservative balance sheet and financing profile, with cash flow from operations

expected to fund the majority of capital investment. The company reported FFO-to-debt of ~17.3%,

comfortably above the estimated downgrade threshold of ~13% and the peer group average of ~13–

15% (we model ~17% across our forecast period). Management targets a long-term range of 17–19%,

which we believe provides balance sheet flexibility and optionality to layer in incremental acquisitions.

That said, maintaining metrics toward the high end of the target range may constrain balance sheet