ARTESIAN RESOURCES CORP (ARTNA) stock intrinsic value fair value estimate & owner earnings analysis

Artesian is a regulated water and wastewater utility serving Delaware, Maryland and Pennsylvania, and its economics look the way a monopoly utility's should. Earnings per share have compounded at roughly 5% a year over the past decade, from $1.41 in 2016 to $2.21 in 2025, with a return on equity that has sat close to 9% throughout and only one down year - 2023, and that was caused by issuing shares rather than by earnings falling. Because a utility buys its growth with retained earnings and new capital, we value only the portion of profit that could genuinely be paid out to an owner; the remainder is the price of expanding the asset base that produces the growth in the first place. On that basis the bear case assumes rate relief lags cost inflation and growth slows to about 2%, at an 11% required return, worth roughly $19.65 a share. The base case carries 4.5% growth - in line with the ten-year record and with what a 9% return on equity can actually fund - discounted at 9.5%, for about $23.50. The bull case assumes 6% growth from continued mains and treatment investment and wastewater expansion at an 8.5% required return, about $28.75. The main thing an owner is underwriting is the capital programme: spending ran $58.8 million in 2025 against depreciation of only $13.8 million, which is the engine of the growth rather than a warning sign, but it does mean the company depends on continuous access to debt and equity markets and on regulators granting timely returns on that spending. Long-term debt stood at $176.4 million against $249.9 million of common equity, and book value is $24.24 a share. First-half 2026 earnings were up about 6% on the same period a year earlier. Because this earnings stream is unusually predictable and the bear case rests on the company's record rather than a guess, we anchor on the base case and apply about a 25% margin of safety, which puts the margin-of-safety price at $17.50.