The calculations below outline how an intrinsic value for United Utilities Group is arrived at by discounting future cash flows to their present value. We use analyst's estimates of cash flows going forward 5 years.
See our documentation to learn about this calculation.
|Levered FCF (GBP, Millions)||£142.25||£150.00||£287.00||£446.00||£454.72|
|Source||Analyst x2||Analyst x4||Analyst x3||Analyst x2||Extrapolated @ (1.96%)|
Discounted (@ 8.3%)
Present value of next 5 years cash flows:
Terminal Value = FCF2021 × (1 + g) ÷ (Discount Rate – g)
Terminal Value = £455 × (1 + 1.5%) ÷ (8.3% – 1.5%)
Terminal value based on the Perpetuity Method where growth (g) = 1.5%:
Present value of terminal value:
Equity Value (Total value) = Present value of next 5 years cash flows + terminal value
Value = Total value / Shares Outstanding (£5,665 / 682)
Value per share:
Current discount (share price of £9.825): -18%
The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.
Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)
Discount rate = 8.3% = 1.49% + (0.8 * 8.51%)
The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm).
Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))
0.704 = 0.378 (1 + (1- 21%) (109.21%))
Levered Beta used in calculation = 0.8
Are United Utilities Group's annual earnings growth expected to exceed 2.1% over the next 3 years?
Mr. Steven Lewis Mogford, also known as Steve, has been the Chief Executive Officer of United Utilities Group PLC since March 31, 2011 and United Utilities Water Limited since March 30, 2011. Mr. Mogford served as the Chief Executive of Selex Sensors (SELEX Galileo). He served as the Chief Executive of Airborne Systems SpA. He joined Selex Sensors and Airborne Systems in May 2007. He served as the Chief Operating Officer of Programmes at BAE Systems PLC since April 1, 2000. He joined British Aerospace Military Aircraft in 1977 as a Supply Engineer and undertook various procurement roles, including Director of Procurement since 1991. Mr. Mogford served as Commercial Director of the Systems and Services Business Unit of British Aerospace upon British Aerospace formation since 1992. He served as Programmes Director of Al Yamamah since 1994 and Managing Director of Systems and Services since 1995. Since August 1998, he served as Managing Director of British Aerospace Military Aircraft and Aerostructures. Following the merger of British Aerospace and Marconi Electronic Systems in November 1999, he served as Group Managing Director Programmes and Managing Director Eurofighter of BAE Systems PLC. He has been the Senior Independent Director and Non-Executive Director at G4S plc since May 27, 2016. He has been Director of United Utilities Water Plc since March 30, 2011 and United Utilities Group PLC since January 5, 2011. Mr. Mogford served as a Non-Executive Director at Carillion Plc from September 2006 to December 31, 2015.and served as its Senior Independent Non Executive Director from May 7, 2014 to September 1, 2015. He served as an Executive Director of BAE Systems PLC from April 2000 to May 9, 2007. He is a Member of the board of the British Quality Foundation. He was educated at Barking Abbey Grammar School in Essex and Queen Elizabeth College, London, where he obtained a First Class Honours Degree in Astrophysics, Maths and Physics.
Average tenure of the United Utilities Group board of directors:
United Utilities Group PLC provides water and wastewater services in the United Kingdom. The company also offers value-added services, such as leak detection and repair, water efficiency advisory, CCTV and drainage, emergency water supply, standpipe, and environmental services; and water network installation, rehabilitation, and repair services, as well as installs water meters. In addition, it is involved in renewable energy generation, corporate trustee, and property management activities; and the provision of consulting and project management services. The company operates 43,000 kilometers (km) of water pipes; 78,000 km of sewerage pipes; 568 wastewater treatment works; and 91 water treatment works. It serves 3 million households and 200,000 business customers in the North West of England. United Utilities Group PLC was incorporated in 2008 and is based in Warrington, the United Kingdom.
|Name:||United Utilities Group PLC|
|Market Cap:||£6,700 million|
Haweswater House, Warrington, WA5 3LP, United Kingdom