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PNN

Pennon Group LSE:PNN Stock Report

Last Price

UK£10.25

Market Cap

UK£2.7b

7D

-1.1%

1Y

-21.2%

Updated

11 Aug, 2022

Data

Company Financials +
PNN fundamental analysis
Snowflake Score
Valuation1/6
Future Growth4/6
Past Performance1/6
Financial Health1/6
Dividends2/6

PNN Stock Overview

Pennon Group Plc provides clean water and wastewater services in the United Kingdom.

Pennon Group Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Pennon Group
Historical stock prices
Current Share PriceUK£10.25
52 Week HighUK£13.35
52 Week LowUK£9.33
Beta0.097
1 Month Change5.45%
3 Month Change-3.67%
1 Year Change-21.15%
3 Year Change-4.35%
5 Year Change-14.80%
Change since IPO434.70%

Recent News & Updates

Jul 15
Pennon Group's (LON:PNN) Shareholders Will Receive A Bigger Dividend Than Last Year

Pennon Group's (LON:PNN) Shareholders Will Receive A Bigger Dividend Than Last Year

The board of Pennon Group Plc ( LON:PNN ) has announced that it will be paying its dividend of £0.2683 on the 5th of...

Jul 01
Pennon Group (LON:PNN) Is Paying Out A Larger Dividend Than Last Year

Pennon Group (LON:PNN) Is Paying Out A Larger Dividend Than Last Year

Pennon Group Plc ( LON:PNN ) has announced that it will be increasing its dividend on the 5th of September to UK£0.27...

Jun 17
Pennon Group (LON:PNN) Will Pay A Larger Dividend Than Last Year At UK£0.27

Pennon Group (LON:PNN) Will Pay A Larger Dividend Than Last Year At UK£0.27

Pennon Group Plc ( LON:PNN ) will increase its dividend on the 5th of September to UK£0.27. The announced payment will...

Jun 03
Pennon Group (LON:PNN) Has Announced That It Will Be Increasing Its Dividend To UK£0.27

Pennon Group (LON:PNN) Has Announced That It Will Be Increasing Its Dividend To UK£0.27

Pennon Group Plc ( LON:PNN ) has announced that it will be increasing its dividend on the 5th of September to UK£0.27...

Shareholder Returns

PNNGB Water UtilitiesGB Market
7D-1.1%-0.4%-0.3%
1Y-21.2%-0.9%-9.1%

Return vs Industry: PNN underperformed the UK Water Utilities industry which returned 0.1% over the past year.

Return vs Market: PNN underperformed the UK Market which returned -8.9% over the past year.

Price Volatility

Is PNN's price volatile compared to industry and market?
PNN volatility
PNN Average Weekly Movement4.3%
Water Utilities Industry Average Movement3.6%
Market Average Movement5.4%
10% most volatile stocks in GB Market10.8%
10% least volatile stocks in GB Market2.7%

Stable Share Price: PNN is not significantly more volatile than the rest of UK stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: PNN's weekly volatility (4%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
19893,000Susan Davyhttps://www.pennon-group.co.uk

Pennon Group Plc provides clean water and wastewater services in the United Kingdom. It provides water and wastewater services for customers in Cornwall, Devon, and parts of Dorset and Somerset; water-only services in the areas of Dorset, Hampshire, and Wiltshire; and water and wastewater retail services to non-household customers in Great Britain. The company also offers regulated water to approximately 1.2 million customers in the Bristol region.

Pennon Group Fundamentals Summary

How do Pennon Group's earnings and revenue compare to its market cap?
PNN fundamental statistics
Market CapUK£2.67b
Earnings (TTM)UK£15.40m
Revenue (TTM)UK£791.30m

173.5x

P/E Ratio

3.4x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
PNN income statement (TTM)
RevenueUK£791.30m
Cost of RevenueUK£21.90m
Gross ProfitUK£769.40m
Other ExpensesUK£754.00m
EarningsUK£15.40m

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

Nov 30, 2022

Earnings per share (EPS)0.059
Gross Margin97.23%
Net Profit Margin1.95%
Debt/Equity Ratio156.1%

How did PNN perform over the long term?

See historical performance and comparison

Dividends

3.8%

Current Dividend Yield

781%

Payout Ratio
We’ve recently updated our valuation analysis.

Valuation

Is PNN undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

1/6

Valuation Score 1/6

  • Price-To-Sales vs Peers

  • Price-To-Sales vs Industry

  • Price-To-Sales vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for PNN?

Other financial metrics that can be useful for relative valuation.

PNN key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue7x
Enterprise Value/EBITDA16x
PEG Ratio5.1x

Price to Sales Ratio vs Peers

How does PNN's PS Ratio compare to its peers?

PNN PS Ratio vs Peers
The above table shows the PS ratio for PNN vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPSEstimated GrowthMarket Cap
Peer Average2.3x
SVT Severn Trent
3.8x4.7%UK£7.5b
UU. United Utilities Group
4.1x3.8%UK£7.6b
DRX Drax Group
0.4x0.8%UK£2.8b
GLO ContourGlobal
1x-0.8%UK£1.7b
PNN Pennon Group
3.4x4.8%UK£2.7b

Price-To-Sales vs Peers: PNN is expensive based on its Price-To-Sales Ratio (3.4x) compared to the peer average (2.3x).


Price to Earnings Ratio vs Industry

How does PNN's PE Ratio compare vs other companies in the Global Water Utilities Industry?

Price-To-Sales vs Industry: PNN is expensive based on its Price-To-Sales Ratio (3.4x) compared to the European Water Utilities industry average (2.9x)


Price to Sales Ratio vs Fair Ratio

What is PNN's PS Ratio compared to its Fair PS Ratio? This is the expected PS Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

PNN PS Ratio vs Fair Ratio.
Fair Ratio
Current PS Ratio3.4x
Fair PS Ratio4.9x

Price-To-Sales vs Fair Ratio: PNN is good value based on its Price-To-Sales Ratio (3.4x) compared to the estimated Fair Price-To-Sales Ratio (4.9x).


Share Price vs Fair Value

What is the Fair Price of PNN when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: PNN (£10.25) is trading above our estimate of fair value (£6.89)

Significantly Below Fair Value: PNN is trading above our estimate of fair value.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is less than 20% higher than the current share price.


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Future Growth

How is Pennon Group forecast to perform in the next 1 to 3 years based on estimates from 10 analysts?

Future Growth Score

4/6

Future Growth Score 4/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


34.0%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: PNN's forecast earnings growth (34% per year) is above the savings rate (0.9%).

Earnings vs Market: PNN's earnings (34% per year) are forecast to grow faster than the UK market (9.4% per year).

High Growth Earnings: PNN's earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: PNN's revenue (4.8% per year) is forecast to grow faster than the UK market (3.9% per year).

High Growth Revenue: PNN's revenue (4.8% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: PNN's Return on Equity is forecast to be low in 3 years time (13.4%).


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Past Performance

How has Pennon Group performed over the past 5 years?

Past Performance Score

1/6

Past Performance Score 1/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


-27.5%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: PNN has high quality earnings.

Growing Profit Margin: PNN's current net profit margins (1.9%) are lower than last year (17.3%).


Past Earnings Growth Analysis

Earnings Trend: PNN's earnings have declined by 27.5% per year over the past 5 years.

Accelerating Growth: PNN's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: PNN had negative earnings growth (-85.7%) over the past year, making it difficult to compare to the Water Utilities industry average (-35.6%).


Return on Equity

High ROE: PNN's Return on Equity (1.2%) is considered low.


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Financial Health

How is Pennon Group's financial position?

Financial Health Score

1/6

Financial Health Score 1/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: PNN's short term assets (£804.7M) exceed its short term liabilities (£415.2M).

Long Term Liabilities: PNN's short term assets (£804.7M) do not cover its long term liabilities (£3.6B).


Debt to Equity History and Analysis

Debt Level: PNN's net debt to equity ratio (128.1%) is considered high.

Reducing Debt: PNN's debt to equity ratio has increased from 127.3% to 156.1% over the past 5 years.

Debt Coverage: PNN's debt is not well covered by operating cash flow (12.7%).

Interest Coverage: PNN's interest payments on its debt are not well covered by EBIT (2.6x coverage).


Balance Sheet


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Dividend

What is Pennon Group current dividend yield, its reliability and sustainability?

Dividend Score

2/6

Dividend Score 2/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage


3.76%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: PNN's dividend (3.76%) is higher than the bottom 25% of dividend payers in the UK market (1.83%).

High Dividend: PNN's dividend (3.76%) is low compared to the top 25% of dividend payers in the UK market (5.11%).


Stability and Growth of Payments

Stable Dividend: PNN's dividend payments have been volatile in the past 10 years.

Growing Dividend: PNN's dividend payments have increased over the past 10 years.


Earnings Payout to Shareholders

Earnings Coverage: With its high payout ratio (780.9%), PNN's dividend payments are not well covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: With its high cash payout ratio (431%), PNN's dividend payments are not well covered by cash flows.


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Management

How experienced are the management team and are they aligned to shareholders interests?

2.1yrs

Average management tenure


CEO

Susan Davy (52 yo)

2.08yrs

Tenure

UK£1,603,000

Compensation

Ms. Susan Jane Davy, Bsc Hons, ACA, serves as Non-Executive Director at Bristol Water plc since March 09, 2022. In addition, she holds directorships in Pennon Water Services Limited, Water UK, Creww Execut...


CEO Compensation Analysis

Compensation vs Market: Susan's total compensation ($USD1.96M) is below average for companies of similar size in the UK market ($USD3.17M).

Compensation vs Earnings: Susan's compensation has been consistent with company performance over the past year.


Leadership Team

Experienced Management: PNN's management team is considered experienced (2.1 years average tenure).


Board Members

Experienced Board: PNN's board of directors are considered experienced (3.9 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Pennon Group Plc's employee growth, exchange listings and data sources


Key Information

  • Name: Pennon Group Plc
  • Ticker: PNN
  • Exchange: LSE
  • Founded: 1989
  • Industry: Water Utilities
  • Sector: Utilities
  • Implied Market Cap: UK£2.672b
  • Shares outstanding: 260.66m
  • Website: https://www.pennon-group.co.uk

Number of Employees


Location

  • Pennon Group Plc
  • Peninsula House
  • Rydon Lane
  • Exeter
  • Devon
  • EX2 7HR
  • United Kingdom

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/08/11 00:00
End of Day Share Price2022/08/11 00:00
Earnings2022/03/31
Annual Earnings2022/03/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.