Eversource Energy (ES) Balance Sheet

The $4.3B increase in net PPE over the last four quarters reflects sustained capital investment, but equity rose just $1.3B in the same period, implying that roughly 70% of the incremental rate base was financed with debt. This pattern suggests the company is leveraging its balance sheet to fund growth, which may pressure credit metrics if allowed ROEs do not keep pace. Investors should monitor whether future rate cases permit sufficient returns to support this leverage.

The consistent quarterly growth in net PPE, from $40.3B in 2024Q1 to $45.3B in 2026Q2, underscores a deliberate strategy to expand the rate base. However, the pace of growth appears to be slowing, with the sequential increase from 2026Q1 to 2026Q2 at just 0.4%, compared to earlier quarters. This deceleration may reflect the completion of certain transmission projects or a deliberate pause to manage leverage, but it also suggests that the most rapid phase of the capital program may be behind.

The D/E ratio has remained stubbornly above 1.8 for the past year, even after the offshore wind divestiture, suggesting that the balance sheet has not yet deleveraged as might have been expected. This elevated leverage, combined with a current ratio of 0.80, points to tight liquidity and limited financial flexibility. While utilities typically operate with higher leverage, Eversource's ratio is at the high end of the peer group, which may increase refinancing risk and interest expense, particularly in a rising rate environment.

The slower growth in equity relative to assets indicates that retained earnings and equity issuances are not keeping pace with capital expenditures. This suggests a growing reliance on debt to fund the capital program, which could strain the balance sheet if cash flows do not improve. The equity-to-assets ratio has remained flat at 0.26, indicating that the capital structure is stable but not improving, and the company may need to issue additional equity to maintain its credit rating.

Despite a temporary cash build in 2026Q2, the current ratio has deteriorated from 0.77 in 2024Q1 to 0.80, reflecting a persistent mismatch between short-term assets and liabilities. This suggests that Eversource is relying on external financing to meet near-term obligations, which is typical for utilities but may become costly if credit conditions tighten. The elevated debt levels and low cash reserves warrant close monitoring of the company's access to capital markets.