LSE:PNN

Stock Analysis Report

NOT FOR DISTRIBUTION
Header cover image

Executive Summary

Pennon Group Plc engages in the environmental infrastructure businesses in the United Kingdom, rest of European Union, China, and internationally.


Snowflake Analysis

Average dividend payer and slightly overvalued.


Similar Companies

Share Price & News

How has Pennon Group's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: PNN has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

0.3%

PNN

1.3%

GB Water Utilities

-0.7%

GB Market


1 Year Return

50.9%

PNN

23.5%

GB Water Utilities

-12.7%

GB Market

Return vs Industry: PNN exceeded the UK Water Utilities industry which returned 19.7% over the past year.

Return vs Market: PNN exceeded the UK Market which returned -16.3% over the past year.


Shareholder returns

PNNIndustryMarket
7 Day0.3%1.3%-0.7%
30 Day-2.8%-0.8%-1.3%
90 Day-3.6%-0.4%4.8%
1 Year57.1%50.9%29.0%23.5%-8.8%-12.7%
3 Year53.9%33.1%25.8%9.3%-7.7%-19.0%
5 Year67.6%33.5%40.9%12.7%11.6%-13.3%

Price Volatility Vs. Market

How volatile is Pennon Group's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Pennon Group undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: PNN (£10.72) is trading below our estimate of fair value (£24.85)

Significantly Below Fair Value: PNN is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: PNN is poor value based on its PE Ratio (38.6x) compared to the XE Water Utilities industry average (29.8x).

PE vs Market: PNN is poor value based on its PE Ratio (38.6x) compared to the UK market (15.5x).


Price to Earnings Growth Ratio

PEG Ratio: PNN is poor value based on its PEG Ratio (2.7x)


Price to Book Ratio

PB vs Industry: PNN is overvalued based on its PB Ratio (2.6x) compared to the XE Water Utilities industry average (2x).


Next Steps

Future Growth

How is Pennon Group forecast to perform in the next 1 to 3 years based on estimates from 4 analysts?

14.2%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: PNN's forecast earnings growth (14.2% per year) is above the savings rate (1.2%).

Earnings vs Market: PNN's earnings (14.2% per year) are forecast to grow slower than the UK market (22% per year).

High Growth Earnings: PNN's earnings are forecast to grow, but not significantly.

Revenue vs Market: PNN's revenue (16.9% per year) is forecast to grow faster than the UK market (4.4% per year).

High Growth Revenue: PNN's revenue (16.9% 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 (16%).


Next Steps

Past Performance

How has Pennon Group performed over the past 5 years?

9.2%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: PNN has high quality earnings.

Growing Profit Margin: PNN's current net profit margins (18.5%) are lower than last year (25.4%).


Past Earnings Growth Analysis

Earnings Trend: PNN's earnings have grown by 9.2% 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 (-27.6%) over the past year, making it difficult to compare to the Water Utilities industry average (-30.1%).


Return on Equity

High ROE: PNN's Return on Equity (7.2%) is considered low.


Next Steps

Financial Health

How is Pennon Group's financial position?


Financial Position Analysis

Short Term Liabilities: PNN's short term assets (£3.5B) exceed its short term liabilities (£940.7M).

Long Term Liabilities: PNN's short term assets (£3.5B) do not cover its long term liabilities (£4.1B).


Debt to Equity History and Analysis

Debt Level: PNN's debt to equity ratio (135%) is considered high.

Reducing Debt: PNN's debt to equity ratio has increased from 125.6% to 135% over the past 5 years.

Debt Coverage: PNN's debt is not well covered by operating cash flow (15.8%).

Interest Coverage: PNN's interest payments on its debt are well covered by EBIT (4.1x coverage).


Balance Sheet


Next Steps

Dividend

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

4.08%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: PNN's dividend (4.08%) is higher than the bottom 25% of dividend payers in the UK market (1.91%).

High Dividend: PNN's dividend (4.08%) is low compared to the top 25% of dividend payers in the UK market (5.49%).


Stability and Growth of Payments

Stable Dividend: PNN's dividends per share have been stable in the past 10 years.

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


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (157.7%), PNN's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: PNN's dividends in 3 years are forecast to be covered by earnings (50.7% payout ratio).


Next Steps

Management

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

2.9yrs

Average management tenure


CEO

Chris Loughlin (67 yo)

4.58yrs

Tenure

UK£2,188,000

Compensation

Mr. Christopher Loughlin, also known as Chris, BSc Hons, MICE, CEng, MBA, serves as Non-Executive Director at Mears Group plc since September 17, 2019. He has been Group Chief Executive Officer of Pennon G ...


CEO Compensation Analysis

Compensation vs Market: Chris's total compensation ($USD2.87M) is about average for companies of similar size in the UK market ($USD3.30M).

Compensation vs Earnings: Chris's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Christopher Loughlin
CEO & Executive Director4.58yrsUK£2.19m0.095%
£ 4.3m
Susan Davy
CFO & Executive Director5.5yrsUK£1.67m0.020%
£ 907.7k
Paul Boote
Group Finance Director & Director0.083yrno datano data
Simon A. Pugsley
Group General Counsel & Company Secretary1.5yrsno datano data
Adele Barker
Group Director of Human Resourcesno datano datano data

2.9yrs

Average Tenure

Experienced Management: PNN's management team is considered experienced (2.9 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Christopher Loughlin
CEO & Executive Director4.58yrsUK£2.19m0.095%
£ 4.3m
Susan Davy
CFO & Executive Director5.5yrsUK£1.67m0.020%
£ 907.7k
Paul Boote
Group Finance Director & Director0.083yrno datano data
John Parker
Chairman of the Board5yrsUK£276.00k0.0064%
£ 289.5k
Gill Rider
Senior Independent Director5.08yrsUK£78.00k0.0012%
£ 53.7k
Neil Cooper
Independent Non-Executive Director5.92yrsUK£69.00kno data
Claire Aimie Ighodaro
Independent Non-Executive Director0.92yrUK£35.00kno data
Iain Evans
Independent Non-Executive Director1.92yrsUK£70.00kno data
John Butterworth
Independent Non-Executive Director0.083yrno datano data

5.0yrs

Average Tenure

65yo

Average Age

Experienced Board: PNN's board of directors are considered experienced (5 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.


Recent Insider Transactions

Ownership Breakdown

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


Top Shareholders

Company Information

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


Key Information

  • Name: Pennon Group Plc
  • Ticker: PNN
  • Exchange: LSE
  • Founded: 1989
  • Industry: Water Utilities
  • Sector: Utilities
  • Market Cap: UK£4.509b
  • Shares outstanding: 420.85m
  • 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

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
PEGR.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJan 1992
PNNLSE (London Stock Exchange)YesOrdinary SharesGBGBPJan 1992
3PNADB (Deutsche Boerse AG)YesOrdinary SharesDEEURJan 1992
PNNLBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPJan 1992
PEGR.YOTCPK (Pink Sheets LLC)UNSPONSORD ADRUSUSDFeb 2009

Biography

Pennon Group Plc engages in the environmental infrastructure businesses in the United Kingdom, rest of European Union, China, and internationally. The company’s Water segment comprises the regulated water ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/08/03 20:57
End of Day Share Price2020/08/03 00:00
Earnings2020/03/31
Annual Earnings2020/03/31


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.