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Pennon Group plc
(LSE:PNN)
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Rating:48Neutral
Price Target:
494.00 p
▼(-8.77% Downside)
Action:Reiterated
Date:06/11/26
The score is held back primarily by balance-sheet and cash-flow risk (high leverage and deeply negative free cash flow) and bearish technicals (below key moving averages with negative MACD). These are partly offset by a strong earnings-call outlook and a high dividend yield, though the elevated P/E keeps valuation support limited.
Positive Factors
Regulated revenue visibility
Operating as a regulated water utility gives durable, predictable revenue and investment recovery via Ofwat's multi-year framework. This supports long-term cash flow stability, planning for capex delivery and predictable tariff-driven revenue, which underpins returns and service continuity.
Negative Factors
High leverage
Elevated debt levels materially constrain financial flexibility and raise refinancing and interest-rate exposure. With debt heavy relative to equity, capacity to absorb shocks is limited, making funding costs and covenant/rollover risk a persistent structural concern for capital allocation and dividend sustainability.
Read all positive and negative factors
Positive Factors
Negative Factors
Regulated revenue visibility
Operating as a regulated water utility gives durable, predictable revenue and investment recovery via Ofwat's multi-year framework. This supports long-term cash flow stability, planning for capex delivery and predictable tariff-driven revenue, which underpins returns and service continuity.
Read all positive factors
Pennon Group plc (PNN) vs. iShares MSCI United Kingdom ETF (EWC)
Market Cap
£2.20B
Dividend Yield6.56%
Average Volume (3M)1.10M
Price to Earnings (P/E)24.2
Beta (1Y)1.14
Revenue Growth23.25%
EPS GrowthN/A
CountryUK
Employees4,000
SectorUtilities
Sector Strength65
IndustryRegulated Water
Share Statistics
EPS (TTM)0.19
Shares Outstanding471,979,250
10 Day Avg. Volume857,521
30 Day Avg. Volume1,097,750
Financial Highlights & Ratios
PEG Ratio-0.13
Price to Book (P/B)1.77
Price to Sales (P/S)1.93
P/FCF Ratio-9.86
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
£615.88Price Target Upside13.73% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering8
EPS Forecast (FY)0.31
Revenue Forecast (FY)£1.37B
Pennon Group plc Business Overview & Revenue Model
Company Description
Pennon Group Plc is a UK-based utility company focused on delivering vital clean water and wastewater management services. The firm supplies integrated water and wastewater solutions to residents in Cornwall, Devon, and particular sections of Dors...
How the Company Makes Money
Pennon makes money primarily through regulated revenue earned by South West Water for delivering water and wastewater services to households and businesses. Customer bills (metered and unmetered charges) form the core revenue stream, covering ongo...
Pennon Group plc Earnings Call Summary
Earnings Call Date:Nov 27, 2025
(Q2-2026)
| % Change Since: |
Next Earnings Date:Dec 01, 2026
Earnings Call Sentiment Positive
The earnings call reflects a strong financial and operational performance with significant revenue growth and successful execution of strategic priorities. However, the company faces challenges with network failures and net ODI penalties in the water business. The overall sentiment leans towards optimism due to the positive financial results and operational successes.Positive Updates
Strong Financial Performance
The company reported a strong return to profitability, with operating profit more than doubling and profit before tax moving from a loss to GBP 65.9 million. Adjusted earnings per share increased to 14p from a prior year loss of 5.5p.
Negative Updates
Challenges with Increased Network Failures
Changing weather fronts have increased the number of network failures, although customer impacts have been mitigated on 70% of these.
Read all updates
Q2-2026 Updates
Positive
Negative
Strong Financial Performance
The company reported a strong return to profitability, with operating profit more than doubling and profit before tax moving from a loss to GBP 65.9 million. Adjusted earnings per share increased to 14p from a prior year loss of 5.5p.
Read all positive updates
Company Guidance
In the call, Pennon Group provided extensive guidance on its performance for fiscal year 2025-2026. The company reported a strong return to profitability, with both underlying and statutory operating profit more than doubling year-on-year, resulting in a profit before tax of GBP 65.9 million. The adjusted earnings per share increased to 14p, covering the interim dividend of 9.26p per share, which reflects a 4.1% increase in line with CPIH. The company's revenues increased by 25% to GBP 658 million, driven by higher tariffs and increased customer consumption, while costs in the Water Group rose by 6%. Despite inflationary pressures, Pennon maintained a strong balance sheet with gearing at 60% and raised GBP 500 million in new debt during the first half of the year. The company continues to focus on delivering its K8 commitments, with GBP 305 million of CapEx already invested in the first half. Pennon is on track to deliver a 7% return on regulated equity, supported by efficient financing and operational improvements. Additionally, the company is targeting net neutral for wastewater ODIs and has achieved a 50% reduction in pollution incidents year-to-date.Pennon Group plc Financial Statement Overview
Summary
Income Statement
62
Positive
Balance Sheet
38
Negative
Cash Flow
29
Negative
| Breakdown | Mar 2026 | Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.29B | 1.05B | 906.80M | 797.20M | 792.30M |
| Gross Profit | 921.60M | 995.90M | 856.00M | 506.70M | 532.30M |
| EBITDA | 514.40M | 302.90M | 319.90M | 261.00M | 368.60M |
| Net Income | 91.50M | -57.90M | -9.50M | 100.00K | 15.40M |
Balance Sheet | |||||
| Total Assets | 7.48B | 7.05B | 6.23B | 5.19B | 5.34B |
| Cash, Cash Equivalents and Short-Term Investments | 388.30M | 417.90M | 145.40M | 165.40M | 519.00M |
| Total Debt | 4.90B | 4.54B | 3.97B | 3.13B | 3.20B |
| Total Liabilities | 6.07B | 5.60B | 5.07B | 4.06B | 4.06B |
| Stockholders Equity | 1.41B | 1.45B | 1.16B | 1.12B | 1.27B |
Cash Flow | |||||
| Free Cash Flow | -253.30M | -575.10M | -450.00M | -173.70M | 25.90M |
| Operating Cash Flow | 376.10M | 93.50M | 148.90M | 157.50M | 254.90M |
| Investing Cash Flow | -632.80M | -676.40M | -658.00M | -330.50M | -639.60M |
| Financing Cash Flow | 168.90M | 866.80M | 510.80M | -180.60M | -2.02B |
Pennon Group plc Technical Analysis
Negative
541.50
Price Trends
509.67
Negative
532.75
Negative
519.35
Negative
Market Momentum
-14.79
Positive
36.84
Neutral
47.78
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:PNN, the sentiment is Negative. The current price of 541.5 is above the 20-day moving average (MA) of 482.66, above the 50-day MA of 509.67, and above the 200-day MA of 519.35, indicating a bearish trend. The MACD of -14.79 indicates Positive momentum. The RSI at 36.84 is Neutral, neither overbought nor oversold. The STOCH value of 47.78 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GB:PNN.
Pennon Group plc Peers Comparison
UnderperformOutperform
Sector (66)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
69 Neutral | £2.54B | 28.00 | 3.94% | 2.78% | -11.94% | -84.94% | |
66 Neutral | $17.65B | 18.10 | 5.60% | 3.62% | 6.62% | 11.55% | |
63 Neutral | £614.15M | 7.60 | 27.40% | 7.01% | 5.60% | 4.97% | |
59 Neutral | £7.93B | 13.02 | 1.68% | 2.86% | -2.11% | -104.48% | |
58 Neutral | £9.76B | 15.28 | 27.72% | 4.45% | 21.96% | 121.69% | |
55 Neutral | £8.92B | 2,383.87 | 20.35% | 4.50% | 16.66% | 61.25% | |
48 Neutral | £2.20B | 24.20 | 6.61% | 6.56% | 23.25% | ― |
* Utilities Sector Average
GB:PNN
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466.40
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Pennon Group plc Corporate Events
Business Operations and StrategyExecutive/Board ChangesDividendsFinancial Disclosures
Pennon returns to profit as AMP8 investment ramps up amid tighter regulation
Positive
Jun 10, 2026
Pennon Group has returned to profitability for 2025/26, reporting statutory pre-tax profit of £114.4m versus a loss a year earlier, as revenue rose to £1.29bn and underlying EBITDA jumped 55% on higher regulated water income and tighter ...
Regulatory Filings and Compliance
Pennon updates market on total voting rights and share capital
Neutral
Jun 1, 2026
Pennon Group plc has confirmed that, as of 31 May 2026, its issued share capital comprises 471,984,868 ordinary shares, of which 5,628 are held in treasury, leaving 471,979,240 shares carrying voting rights. The company highlighted that this figur...
Regulatory Filings and Compliance
Pennon CFO acquires shares under company incentive plan
Neutral
May 20, 2026
Pennon Group plc has disclosed a share transaction involving its group chief financial officer, Laura Flowerdew, under regulatory requirements for persons discharging managerial responsibilities. The notification concerns ordinary shares acquired ...
Executive/Board Changes
Pennon Group CFO Has SAYE Share Options Cancelled
Neutral
May 14, 2026
Pennon Group plc disclosed that stock options previously granted to Group Chief Financial Officer Laura Flowerdew under the company’s 2024 Save As You Earn employee share scheme were cancelled on 27 June 2025. The cancellation of 2,744 optio...
Delistings and Listing Changes
Pennon Adds Shares to LSE Listing via Employee SAYE Scheme
Neutral
May 6, 2026
Pennon Group plc has admitted 3,599 new ordinary shares of 61.05 pence each to trading on the London Stock Exchange, taking the total number of shares in issue to 471,984,868. The newly admitted shares are fully fungible with existing stock and ar...
Regulatory Filings and Compliance
Pennon Updates Total Voting Rights to Guide Shareholder Disclosures
Neutral
May 1, 2026
Pennon Group plc has confirmed that as of 30 April 2026 its issued share capital comprises 471,984,868 ordinary shares, of which 5,628 are held in treasury, leaving 471,979,240 voting shares in circulation. The company highlighted that this voting...
Regulatory Filings and Compliance
Pennon Confirms Updated Share Capital and Voting Rights
Neutral
May 1, 2026
Pennon Group plc has confirmed that, as of 30 April 2026, its issued share capital comprises 471,984,868 ordinary shares, of which 5,628 are held in treasury, leaving 471,979,240 voting shares in circulation. This updated share and voting rights t...
Regulatory Filings and Compliance
Pennon CFO acquires shares under company incentive plan
Positive
Apr 21, 2026
Pennon Group has reported a routine share transaction by its group chief financial officer, Laura Flowerdew, under the company’s Share Incentive Plan. She purchased 27 partnership shares at 544p each and received nine matching shares at no c...
Financial Disclosures
Pennon Group Delays Release of 2026 Full-Year Results
Negative
Apr 14, 2026
Pennon Group plc has rescheduled the publication of its audited full-year results for the year ended 31 March 2026, moving the release date from 2 June 2026 to 10 June 2026. The change slightly delays the availability of detailed financial and ope...
Regulatory Filings and Compliance
Pennon Updates Total Voting Rights and Share Capital
Neutral
Apr 1, 2026
Pennon Group plc has confirmed that, as of 31 March 2026, its issued share capital comprises 471,983,593 ordinary shares, of which 5,628 are held in treasury, leaving 471,977,965 shares carrying voting rights. This updated voting rights figure pro...
Other
Pennon CFO Increases Stake Through Share Incentive Plan
Positive
Mar 20, 2026
Pennon Group’s Group Chief Financial Officer, Laura Flowerdew, has purchased ordinary shares and received matching shares under the company’s Share Incentive Plan. The transaction, conducted on 19 March 2026 on the London Stock Exchang...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.