LSE:PNN

Stock Analysis Report

Executive Summary

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

Snowflake

Fundamentals

Established dividend payer with mediocre balance sheet.


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


Market Performance


7 Day Return

6.1%

PNN

5.0%

GB Water Utilities

2.0%

GB Market


1 Year Return

23.6%

PNN

23.2%

GB Water Utilities

3.3%

GB Market

Return vs Industry: PNN matched the UK Water Utilities industry which returned 23.2% over the past year.

Return vs Market: PNN exceeded the UK Market which returned 3.3% over the past year.


Share holder returns

PNNIndustryMarket
7 Day6.1%5.0%2.0%
30 Day14.4%8.4%-1.0%
90 Day17.5%10.6%-1.7%
1 Year30.6%23.6%29.6%23.2%8.3%3.3%
3 Year19.0%2.5%10.3%-4.0%19.0%4.5%
5 Year39.6%11.5%37.9%10.6%38.4%8.4%

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 based on future cash flows and its price relative to the stock market?

10%

Discount to future cash flow value


Intrinsic Value Based on Future Cash Flows

Undervalued: PNN (£8.64) is trading below our estimate of fair value (£9.59)

Significantly Undervalued: PNN is trading below fair value, but not by a significant amount.


Price Based on Earnings

PE vs Industry: PNN is good value based on its PE Ratio (16.9x) compared to the Water Utilities industry average (16.9x).

PE vs Market: PNN is poor value based on its PE Ratio (16.9x) compared to the UK market (16.4x).


Price Based on Expected Growth

Low PEG Ratio: PNN is poor value based on its PEG Ratio (6.5x)


Price Based on Value of Assets

PB vs Industry: PNN is overvalued based on its PB Ratio (2.2x) compared to the XE Water Utilities industry average (1.8x).


Next Steps

Future Growth

How is Pennon Group expected to perform in the next 1 to 3 years based on estimates from 11 analysts?

2.6%

Forecasted annual earnings growth


Earnings and Revenue Growth Estimates


Future Annual Growth Analysis

Earnings vs Savings Rate: PNN's forecast earnings growth (2.6% per year) is above the savings rate (1.2%).

Earnings vs Market: PNN's earnings (2.6% per year) are forecast to grow slower than the UK market (12.3% per year).

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

Revenue vs Market: PNN's revenue (0.8% per year) is forecast to grow slower than the UK market (4% per year).

High Growth Revenue: PNN's revenue (0.8% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Estimates


Future Return on Equity

High Future ROE: PNN's Return on Equity is forecast to be low in 3 years time (15%).


Next Steps

Past Performance

How has Pennon Group performed over the past 5 years?

14.4%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Earnings Trend: PNN's earnings have grown by 14.4% per year over the past 5 years.

Accelerating Growth: PNN's earnings growth over the past year (6.8%) is below its 5-year average (14.4% per year).

Earnings vs Industry: PNN earnings growth over the past year (6.8%) underperformed the Water Utilities industry 6.8%.


Return on Equity

High ROE: PNN's Return on Equity (13.3%) is considered low.


Return on Assets

ROA vs Industry: PNN's Return on Assets is below or equal to the Water Utilities industry average last year.


Return on Capital Employed

ROCE Improving: PNN has improved its Return on Capital Employed over the past 3 years.


Next Steps

Financial Health

How is Pennon Group's financial position?


Financial Position Analysis

Short Term Liabilities: PNN's short term assets (£1.1B) exceeds its short term liabilities (£511.1M)

Long Term Liabilities: PNN's short term assets (1.1B) do not cover its long term liabilities (4.3B)


Debt to Equity History and Analysis

Debt Level: PNN's debt to equity ratio (125.6%) is considered high

Reducing Debt: PNN's debt to equity ratio has reduced from 130.3% to 125.6% over the past 5 years.

Debt Coverage: PNN's debt is not well covered by operating cash flow (13.6%).

Interest Coverage: PNN's interest payments on its debt are well covered by EBIT (5x coverage).


Balance Sheet

Inventory Level: PNN has a high level of physical assets or inventory.

Debt Coverage by Assets: PNN's debt is not covered by short term assets (assets are 0.5x debt).


Next Steps

Dividend

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

5.34%

Expected Dividend Yield


Dividend Yield vs Market

company4.8%marketbottom25%2.0%markettop25%5.4%industryaverage4.2%forecastin3Years5.3%

Current dividend yield vs market & industry


Dividend Yield and Payments Analysis

Notable Dividend: PNN's dividend (4.75%) is higher than the bottom 25% of dividend payers in the UK market (2%).

High Dividend: PNN's dividend (4.75%) is low compared to the top 25% of dividend payers in the UK market (5.42%).

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: At its current payout ratio (80.4%), PNN's payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: PNN's dividends in 3 years are forecast to be covered by earnings (81.6% payout ratio).


Next Steps

Management

What is the CEO of Pennon Group's salary, the management and board of directors tenure and is there insider trading?

3.5yrs

Average management tenure


CEO

Chris Loughlin (66yo)

3.8yrs

Tenure

UK£1,408,000

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 ($USD1.79M) is about average for companies of similar size in the UK market ($USD2.29M).

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


Management Age and Tenure

3.5yrs

Average Tenure

Experienced Management: PNN's management team is considered experienced (3.5 years average tenure).


Board Age and Tenure

4.2yrs

Average Tenure

65yo

Average Age

Experienced Board: PNN's board of directors are considered experienced (4.2 years average tenure).


Insider Trading

Insider Buying: PNN insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

BuyUK£17,68013 Aug 19
Gill Rider
EntityIndividual
Role
Lead Director
Senior Independent Director
Shares2,500
Max PriceUK£7.07

Ownership Breakdown


Management Team

  • Chris Loughlin (66yo)

    CEO & Executive Director

    • Tenure: 3.8yrs
    • Compensation: UK£1.41m
  • Susan Davy (49yo)

    CFO & Executive Director

    • Tenure: 4.7yrs
    • Compensation: UK£1.08m
  • Sarah Heald

    Director of Corporate Affairs & Investor Relations

    • Tenure: 0yrs
  • Phil Piddington

    Managing Director of Viridor

    • Tenure: 0yrs
  • Adele Barker

    Group Director of Human Resources

    • Tenure: 0yrs
  • Simon A. Pugsley

    General Counsel & Company Secretary

    • Tenure: 0.7yrs

Board Members

  • John Parker (77yo)

    Chairman

    • Tenure: 4.2yrs
    • Compensation: UK£270.00k
  • Gill Rider (64yo)

    Senior Independent Director

    • Tenure: 4.3yrs
    • Compensation: UK£77.00k
  • Chris Loughlin (66yo)

    CEO & Executive Director

    • Tenure: 3.8yrs
    • Compensation: UK£1.41m
  • Martin Hagen (67yo)

    Non-Executive Director of South West Water

    • Tenure: 3.5yrs
  • Neil Cooper (52yo)

    Independent Non-Executive Director

    • Tenure: 5.1yrs
    • Compensation: UK£69.00k
  • Susan Davy (49yo)

    CFO & Executive Director

    • Tenure: 4.7yrs
    • Compensation: UK£1.08m
  • Claire Aimie Ighodaro

    Independent Non-Executive Director

    • Tenure: 0.08yrs
  • Matthew Taylor

    Non-Executive Director of South West Water

    • Tenure: 0yrs
  • Iain Evans

    Independent Non-Executive Director

    • Tenure: 1.1yrs
    • Compensation: UK£40.00k

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£3.633b
  • Shares outstanding: 420.35m
  • 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 Analysis2019/10/13 21:28
End of Day Share Price2019/10/11 00:00
Earnings2019/03/31
Annual Earnings2019/03/31


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.

© 2018 SIMPLY WALL STREET PTY LTD, COMMUNITY DESIGN 2845206, US DESIGN PATENT #29/544/281, EUROPEAN DESIGN REGISTRATION #2845206, STANDARD & POOR’S FINANCIAL SERVICES LLC. ALL RIGHTS RESERVED.

Simply Wall Street Pty Ltd (ACN 600 056 611), is a Corporate Authorised Representative (Authorised Representative Number: 467183) of Sanlam Private Wealth Pty Ltd (AFSL No. 337927). Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situation or needs. You should not rely on any advice and/or information contained in this website and before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice. Please read our Financial Services Guide before deciding whether to obtain financial services from us.

Copyright © 2018, Standard & Poor’s Financial Services LLC. Reproduction of S&P Capital IQ in any form is prohibited except with the prior written permission of S&P. S&P does not guarantee the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions, regardless of the cause or for the results obtained from the use of such information. S&P DISCLAIMS ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. In no event shall S&P be liable for any direct, indirect, special or consequential damages, costs, expenses, legal fees, or losses (including lost income or lost profit and opportunity costs) in connection with subscriber’s or others’ use of S&P Capital IQ. (2018)