The calculations below outline how an intrinsic value for
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)||£125.00||£183.00||£190.00||£194.82||£199.76|
|Source||Analyst x1||Analyst x1||Analyst x1||Extrapolated @ (2.54%)||Extrapolated @ (2.54%)|
Discounted (@ 8.3%)
Present value of next 5 years cash flows:
Terminal Value = FCF2022 × (1 + g) ÷ (Discount Rate – g)
Terminal Value = £200 × (1 + 1.49%) ÷ (8.3% – 1.49%)
Terminal value based on the Perpetuity Method where growth (g) =
Present value of terminal value:
Equity Value (Total value) = Present value of next 5 years cash flows +
£2,696 = £697 + £1,999
Value = Total value / Shares Outstanding (£2,696 / 419)Discount to Share Price
Value per share:
Current discount (share price of £6.38): 0.78%
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). Note the market value of equity is used not the book value (£2,598,546,673).
Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))
0.786 = 0.382 (1 + (1- 19%) (130.5%))
Levered Beta used in calculation = 0.8
Mr. Christopher Loughlin, also known as Chris, BSc Hons, MICE, CEng, MBA, has been Group Chief Executive Officer of Pennon Group Plc since January 1, 2016. Mr. Loughlin served as the Chief Executive Officer of South West Water Limited from August 1, 2006 to December 31, 2015. Mr. Loughlin served as Chief Operating Officer of Lloyd's Register. He started his career as a Consulting Engineer and subsequently held a number of senior positions at British Nuclear Fuels. He served as an Executive Chairman of Magnox Electric Plc. He serves as Non-Executive Director of Bournemouth Water Ltd. He has been an Executive Director at Pennon Group Plc since August 1, 2006. He served as an Executive Director of British Nuclear Fuels Ltd. Mr. Loughlin is a chartered civil engineer and has an honours degree in civil engineering and an MBA.
Average tenure of the Pennon Group management team in years:
Average tenure and age of the Pennon Group board of directors in years:
I am going to run you through how I calculated the intrinsic value of Pennon Group Plc (LSE:PNN) by estimating the company's future cash flows and discounting them to their present value. … 5-year cash flow predict 2018 2019 2020 2021 2022 Levered FCF (£, Millions) £125.00 £183.00 £190.00 £194.82 £199.76 Source Analyst x1 Analyst x1 Analyst x1 Extrapolated @ (2.54%) Extrapolated @ (2.54%) Present Value Discounted @ 8.3% £115.42 £156.03 £149.59 £141.63 £134.09 Present Value of 5-year Cash Flow (PVCF)= £697 After calculating the present value of future cash flows in the intial 5-year period we need to calculate the Terminal Value, which accounts for all the future cash flows beyond the first stage. … Terminal Value (TV) = FCF2022 × (1 + g) ÷ (r – g) = £200 × (1 + 1.5%) ÷ (8.3% – 1.5%) = £2,978 Present Value of Terminal Value (PVTV) = TV / (1 + r)5 = £2,978 / ( 1 + 8.3%)5 = £1,999 The total value is the sum of cash flows for the next five years and the discounted terminal value, which results in the Total Equity Value, which in this case is £2,696.Simply Wall St - – Full article
See our latest analysis for Pennon Group Here's how I find good dividend stocks When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas: Is it the top 25% annual dividend yield payer? … LSE:PNN Historical Dividend Yield Feb 9th 18 Does Pennon Group pass our checks? … Next Steps: Considering the dividend attributes we analyzed above, Pennon Group is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio.Simply Wall St - – Full article
With a market cap of £3.05B, Pennon Group pays out 83.88% of its earnings, leading to a 4.95% yield. … View our latest analysis for Pennon Group What Is A Dividend Rock Star? … More specifically: Its annual yield is among the top 25% of dividend payers It has paid dividend every year without dramatically reducing payout in the past Its has increased its dividend per share amount over the past It is able to pay the current rate of dividends from its earnings It has the ability to keep paying its dividends going forward High Yield And Dependable Pennon Group's dividend yield stands at 4.95%, which is high for Water Utilities stocks.Simply Wall St - – Full article
Check out our latest analysis for Pennon Group What Is A Dividend Rock Star? … More specifically: Its annual yield is among the top 25% of dividend payers It consistently pays out dividend without missing a payment or significantly cutting payout Its has increased its dividend per share amount over the past It is able to pay the current rate of dividends from its earnings It has the ability to keep paying its dividends going forward High Yield And Dependable Pennon Group currently yields 4.85%, which is high for water utilities stocks. … Next Steps: There aren't many other stocks out there with the same track record as Pennon Group, so I would certainly recommend further examining the stock if its dividend characteristics appeal to you.Simply Wall St - – Full article
Pennon Group Plc (LSE:PNN), a water utilities company based in United Kingdom, saw its share price hover around a small range of £7.62 to £8.22 over the last few weeks. … This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again. … If you believe Pennon Group should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable.Simply Wall St - – Full article
LSE:PNN Historical Dividend Yield Dec 23rd 17 Meggitt PLC (LSE:MGGT) Meggitt PLC designs and manufactures components and sub-systems for aerospace, defense, energy, medical, industrial, test, and automotive markets in the United Kingdom, rest of Europe, the United States, and internationally. … LSE:MGGT Historical Dividend Yield Dec 23rd 17 Severn Trent Plc (LSE:SVT) Severn Trent Plc operates as a water and sewerage company in the United Kingdom, the United States, and internationally. … LSE:SVT Historical Dividend Yield Dec 23rd 17 For more solid dividend payers to add to your portfolio, you can use our free platform to explore our interactive list of top dividend payers.Simply Wall St - – Full article
View our latest analysis for Pennon Group Is PNN’s level of debt at an acceptable level? … To assess this, I compare PNN's cash and other liquid assets against its upcoming debt. … PNN’s high debt levels are not met with high cash flow coverage.Simply Wall St - – Full article
LSE:PNN Historical Dividend Yield Dec 10th 17 Severn Trent Plc (LSE:SVT) SVT has a great dividend yield of 4.15% and is paying out 67.28% of profits as dividends , with an expected payout of 71.69% in three years. … LSE:SVT Historical Dividend Yield Dec 10th 17 United Utilities Group PLC (LSE:UU.) UU. … Historical Dividend Yield Dec 10th 17 For more solid dividend payers to add to your portfolio, you can use our free platform to explore our interactive list of top dividend payers.Simply Wall St - – Full article
Check out our latest analysis for Pennon Group What you must know about ROE Return on Equity (ROE) weighs PNN’s profit against the level of its shareholders’ equity. … ROE can be broken down into three different ratios: net profit margin, asset turnover, and financial leverage. … This is called the Dupont Formula: Dupont Formula ROE = profit margin × asset turnover × financial leverage ROE = (annual net profit ÷ sales) × (sales ÷ assets) × (assets ÷ shareholders’ equity) ROE = annual net profit ÷ shareholders’ equity LSE:PNN Last Perf Dec 4th 17 Essentially, profit margin shows how much money the company makes after paying for all its expenses.Simply Wall St - – Full article
In this article I am going to calculate the intrinsic value of Pennon Group Plc (LSE:PNN) by taking the expected future cash flows and discounting them to their present value. … 5-year cash flow estimate 2017 2018 2019 2020 2021 Levered FCF (GBP, Millions) £128.00 £119.00 £150.00 £195.00 £200.31 Source Analyst x1 Analyst x1 Analyst x2 Analyst x2 Extrapolated @ (2.72%) Present Value Discounted @ 8.3% £118.19 £101.46 £118.09 £141.76 £134.46 Present Value of 5-year Cash Flow (PVCF)= £614 After calculating the present value of future cash flows in the intial 5-year period we need to calculate the Terminal Value, which accounts for all the future cash flows beyond the first stage. … LSE:PNN Intrinsic Value Nov 19th 17 The assumptions I'd like to point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows.Simply Wall St - – Full article
Pennon Group Plc engages in the environmental infrastructure businesses worldwide. The company operates through Water, and Waste Management segments. The Water segment comprises the regulated water and wastewater services for customers in Cornwall, Devon, and parts of Dorset and Somerset serving 1.7 million customers; and water services in the areas of Dorset, Hampshire, and Wiltshire serving approximately 0.5 million customers. The Waste Management segment provides recycling, energy recovery, and waste management services serving approximately 150 local authorities and corporate clients, as well as 32,000 customers across the United Kingdom. The company operates 8 energy recovery facilities; 300 recycling, energy recovery, and waste management facilities; and 650 waste collection vehicles securing materials. Pennon Group Plc was incorporated in 1989 and is based in Exeter, the United Kingdom.
|Name:||Pennon Group Plc|
Pennon Group Plc
Devon, EX2 7HR,
|Exchange Symbol||Ticker Symbol||Security||Exchange||Country||Currency||Listed on|
|LSE||PNN||Ordinary Shares||London Stock Exchange||GB||GBP||02. Jan 1992|
|OTCPK||PEGR.F||Ordinary Shares||Pink Sheets LLC||US||USD||02. Jan 1992|
|DB||3PNA||Ordinary Shares||Deutsche Boerse AG||DE||EUR||02. Jan 1992|
|BATS-CHIXE||PNNL||Ordinary Shares||BATS 'Chi-X Europe'||GB||GBP||02. Jan 1992|
|OTCPK||PEGR.Y||ADR||Pink Sheets LLC||US||USD||12. Feb 2009|
|Company Analysis updated:||2018/02/24|
|Last estimates confirmation:||2018/02/13|
|Last earnings update:||2017/09/30|
|Last annual earnings update:||2017/03/31|
All dates in UTC. All financial data provided by Standard & Poor’s Capital IQ.
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.