LSE:SVT

Stock Analysis Report

Executive Summary

Severn Trent Plc operates as a water and sewerage company in the United Kingdom and internationally.

Rewards

Earnings are forecast to grow 0.69% per year

Earnings grew by 15% over the past year

Pays a high and reliable dividend of 3.84%

Risk Analysis

Debt is not well covered by operating cash flow



Snowflake Analysis

Solid track record established dividend payer.


Similar Companies

Share Price & News

How has Severn Trent's share price performed over time and what events caused price changes?


Latest Share Price and Events

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


Market Performance


7 Day Return

2.0%

SVT

2.8%

GB Water Utilities

-0.2%

GB Market


1 Year Return

34.1%

SVT

34.3%

GB Water Utilities

6.1%

GB Market

Return vs Industry: SVT matched the UK Water Utilities industry which returned 34.3% over the past year.

Return vs Market: SVT exceeded the UK Market which returned 6.1% over the past year.


Shareholder returns

SVTIndustryMarket
7 Day2.0%2.8%-0.2%
30 Day1.0%3.9%-1.8%
90 Day10.5%16.5%4.0%
1 Year40.3%34.1%40.8%34.3%11.8%6.1%
3 Year28.3%12.9%33.8%16.5%17.5%2.6%
5 Year56.1%27.3%50.6%20.7%34.8%3.7%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

Is Severn Trent undervalued compared to its fair value and its price relative to the market?

20.83x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: SVT (£26.09) is trading above our estimate of fair value (£21.25)

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


Price To Earnings Ratio

PE vs Industry: SVT is poor value based on its PE Ratio (20.8x) compared to the Water Utilities industry average (17.3x).

PE vs Market: SVT is poor value based on its PE Ratio (20.8x) compared to the UK market (18.5x).


Price to Earnings Growth Ratio

PEG Ratio: SVT is poor value based on its PEG Ratio (30x)


Price to Book Ratio

PB vs Industry: SVT is overvalued based on its PB Ratio (5x) compared to the XE Water Utilities industry average (1.8x).


Next Steps

Future Growth

How is Severn Trent forecast to perform in the next 1 to 3 years based on estimates from 11 analysts?

0.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: SVT's forecast earnings growth (0.7% per year) is above the savings rate (0.5%).

Earnings vs Market: SVT's earnings (0.7% per year) are forecast to grow slower than the UK market (12.2% per year).

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

Revenue vs Market: SVT's revenue (0.8% per year) is forecast to grow slower than the UK market (3.4% per year).

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


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: SVT's Return on Equity is forecast to be high in 3 years time (22.2%)


Next Steps

Past Performance

How has Severn Trent performed over the past 5 years?

8.2%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: SVT has high quality earnings.

Growing Profit Margin: SVT's current net profit margins (16.5%) are higher than last year (14.8%).


Past Earnings Growth Analysis

Earnings Trend: SVT's earnings have grown by 8.2% per year over the past 5 years.

Accelerating Growth: SVT's earnings growth over the past year (15%) exceeds its 5-year average (8.2% per year).

Earnings vs Industry: SVT earnings growth over the past year (15%) exceeded the Water Utilities industry 7.5%.


Return on Equity

High ROE: Whilst SVT's Return on Equity (24.14%) is high, this metric is skewed due to their high level of debt.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Severn Trent's financial position?


Financial Position Analysis

Short Term Liabilities: SVT's short term assets (£696.8M) do not cover its short term liabilities (£1.0B).

Long Term Liabilities: SVT's short term assets (£696.8M) do not cover its long term liabilities (£8.2B).


Debt to Equity History and Analysis

Debt Level: SVT's debt to equity ratio (501.8%) is considered high.

Reducing Debt: SVT's debt to equity ratio has increased from 434.8% to 501.8% over the past 5 years.

Debt Coverage: SVT's debt is not well covered by operating cash flow (12.9%).

Interest Coverage: SVT's interest payments on its debt are well covered by EBIT (3.2x coverage).


Balance Sheet

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

Debt Coverage by Assets: SVT's debt is not covered by short term assets (assets are 0.1x debt).


Next Steps

Dividend

What is Severn Trent's current dividend yield, its reliability and sustainability?

3.84%

Current Dividend Yield


Dividend Yield vs Market

company3.8%marketbottom25%1.8%markettop25%5.1%industryaverage3.8%forecastin3Years4.0%

Current dividend yield vs market & industry

Notable Dividend: SVT's dividend (3.84%) is higher than the bottom 25% of dividend payers in the UK market (1.83%).

High Dividend: SVT's dividend (3.84%) is low compared to the top 25% of dividend payers in the UK market (5.1%).


Stability and Growth of Payments

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

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


Current Payout to Shareholders

Dividend Coverage: At its current payout ratio (76.7%), SVT's payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: SVT's dividends in 3 years are forecast to be covered by earnings (82.2% payout ratio).


Next Steps

Management

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

5.0yrs

Average management tenure


CEO

Liv Garfield (43yo)

5.8yrs

Tenure

UK£2,395,400

Compensation

Ms. Olivia R. Garfield, also known as Liv, BA (Hons), has been Executive Director of Hafren Dyfrdwy Limited since February 17, 2017. She has been the Chief Executive Officer at Severn Trent Plc and Severn  ...


CEO Compensation Analysis

Compensation vs Market: Liv's total compensation ($USD3.12M) is about average for companies of similar size in the UK market ($USD3.35M).

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


Leadership Team

NamePositionTenureCompensationOwnership
Olivia Garfield
CEO & Executive Director 5.8yrsUK£2.40m0.076% £4.7m
James Bowling
CFO & Executive Director4.8yrsUK£1.25m0.021% £1.3m
Richard Eadie
Head of Investor Relation2.1yrsno datano data
Bronagh Kennedy
General Counsel & Company Secretary8.7yrsno datano data
Neil Morrison
Director of Human Resources2.5yrsno datano data
Andrew Smith
Managing Director of Business Services5.6yrsUK£776.10k0.0043% £267.2k
Sarah Bentley
Chief Customer Officer5.2yrsno datano data
Helen Miles
Capital Delivery & Commercial Director0yrsno data0.0068% £421.3k
Shane Anderson
Head of Economic Regulation0yrsno datano data
James Jesic
Managing Director of Production2.2yrsno data0.0013% £80.2k

5.0yrs

Average Tenure

48yo

Average Age

Experienced Management: SVT's management team is seasoned and experienced (5 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Olivia Garfield
CEO & Executive Director 5.8yrsUK£2.40m0.076% £4.7m
James Bowling
CFO & Executive Director4.8yrsUK£1.25m0.021% £1.3m
Andrew Duff
Non-Executive Chairman9.6yrsUK£287.60k0.0034% £213.8k
Dominique J. Reiniche
Independent Non-Executive Director3.6yrsUK£55.10k0.00017% £10.6k
Christine Hodgson
Independent Non-Executive Director0.08yrsno datano data
Kevin Beeston
Senior Independent Non Executive Director3.6yrsUK£65.10k0.00094% £58.4k
John Coghlan
Independent Non Executive Director5.8yrsUK£85.10k0.0011% £69.6k
Philip Remnant
Independent Non Executive Director5.9yrsUK£70.10k0.00083% £51.6k
Angela R. Strank
Independent Non-Executive Director6.1yrsUK£68.10k0.00019% £11.8k

5.8yrs

Average Tenure

60yo

Average Age

Experienced Board: SVT's board of directors are considered experienced (5.8 years average tenure).


Ownership

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


Insider Trading Volume

Insider Buying: SVT insiders have only sold shares 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

Severn Trent Plc's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Severn Trent Plc
  • Ticker: SVT
  • Exchange: LSE
  • Founded: 1974
  • Industry: Water Utilities
  • Sector: Utilities
  • Market Cap: UK£6.214b
  • Shares outstanding: 238.17m
  • Website: https://www.severntrent.com

Number of Employees


Location

  • Severn Trent Plc
  • Severn Trent Centre
  • 2 St John’s Street
  • Coventry
  • West Midlands
  • CV1 2LZ
  • United Kingdom

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
SVTR.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJan 1992
SVTLSE (London Stock Exchange)YesOrdinary SharesGBGBPJan 1992
SVT1DB (Deutsche Boerse AG)YesOrdinary SharesDEEURJan 1992
SVTLBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPJan 1992
STRN.YOTCPK (Pink Sheets LLC)SPONSORED ADRUSUSDMar 2012

Biography

Severn Trent Plc operates as a water and sewerage company in the United Kingdom and internationally. It operates through two segments, Regulated Water and Waste Water, and Business Services. The Regulated Water and Waste Water segment offers water and sewerage services to approximately 4.5 million households and businesses in the Midlands and Wales. The Business Services segment provides sludge treatment and related renewable energy generating services; and generates renewable energy from anaerobic digestion, crop, hydropower, wind turbines, and solar technology. It also provides contract services to municipal and industrial clients in the United Kingdom and Ireland; and the United Kingdom Ministry of Defense for design, build, and operation of water and waste water treatment facilities and networks, as well as services to developers. In addition, this segment manages and sells land; and offers developer, property search, and others services. The company was founded in 1974 and is headquartered in Coventry, the United Kingdom. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/16 21:06
End of Day Share Price2020/02/14 00:00
Earnings2019/09/30
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.