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Pennon Group PLC (GB:PNN)
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Pennon Group plc (PNN) AI Stock Analysis

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GB:PNN

Pennon Group plc

(LSE:PNN)

Rating:58Neutral
Price Target:
509.00p
▲(6.84% Upside)
Pennon Group plc's overall stock score reflects a mix of strengths and challenges. The financial performance is hindered by profitability issues and increased leverage, while technical indicators suggest bearish momentum. Valuation is impacted by a negative P/E ratio, though the high dividend yield is a positive. The earnings call provided a balanced view with strategic growth and a focus on future profitability.

Pennon Group plc (PNN) vs. iShares MSCI United Kingdom ETF (EWC)

Pennon Group plc Business Overview & Revenue Model

Company DescriptionPennon Group Plc provides clean water and wastewater services in the United Kingdom. It provides water and wastewater services for customers in Cornwall, Devon, and parts of Dorset and Somerset; water-only services in the areas of Dorset, Hampshire, and Wiltshire; and water and wastewater retail services to non-household customers in Great Britain. The company also offers regulated water to approximately 1.2 million customers in the Bristol region. It serves approximately 50 million household and non-household customers. The company was incorporated in 1989 and is based in Exeter, the United Kingdom.
How the Company Makes MoneyPennon Group generates revenue primarily through the provision of water and wastewater services, which are regulated by Ofwat, the water services regulator in England and Wales. The company earns money from customer water bills, which include charges for water supply and sewage treatment. Additionally, Viridor contributes significantly to revenue through its waste management operations, which involve the collection, recycling, and energy recovery from waste. Partnerships with local authorities and businesses for waste services further enhance this revenue stream. Pennon also benefits from regulatory incentives for improving environmental standards and efficiency, which can lead to additional earnings through performance-based payments.

Pennon Group plc Earnings Call Summary

Earnings Call Date:Jun 03, 2025
(Q4-2025)
|
% Change Since: |
Next Earnings Date:Nov 26, 2025
Earnings Call Sentiment Neutral
The earnings call presented a balanced view, highlighting strong strategic growth through acquisitions and robust financial positioning, while also acknowledging operational challenges, particularly regarding pollution incidents and financial performance.
Q4-2025 Updates
Positive Updates
Top Quartile Regulatory Performance
Pennon Group delivered on 70% of stretching regulatory targets, placing them in the top quartile across the water sector.
Strategic Acquisitions and Growth
The acquisition of Sutton and East Surrey has been completed, with CMA approval obtained. The RCV has grown by 75% over the regulatory period, with 30% of that growth coming from acquisitions.
Strong Financial Position
A successful rights issue raised £490 million, contributing to a strong balance sheet with water group gearing at 61.8%.
No Hosepipe Ban Due to Improved Water Management
Significant investments have broken the drought cycle, eliminating the need for a hosepipe ban in the South West.
Record Capital Investment
The group invested £652 million in CapEx this year, positioning well for future delivery.
Negative Updates
Financial Loss Before Tax
The group reported a loss before tax of £35.1 million due to various factors including lower-than-anticipated water business wholesale revenues.
Pollution Incidents
Despite some improvements, pollution incidents remain a challenge with the anticipation of another 2-star rating from the Environment Agency.
Challenges in Water Quality and Leakage
Missed leakage targets for South West Water and Bristol Water, requiring further focus and improvement.
Company Guidance
In the recent call, Pennon Group's CEO Susan Davy and CFO Laura Flowerdew provided detailed guidance for the upcoming fiscal period. They highlighted the company's strong performance in the K7 regulatory period, achieving 70% of their ambitious regulatory targets, placing them in the top quartile of the sector. They also reported a stable EBITDA performance despite a challenging sector backdrop, with a full-year revenue of over £1 billion and a loss before tax of £35.1 million. The group invested a record £652 million in capital expenditures, primarily in the water business, and raised £490 million through a rights issue, ending the period with water group gearing at 61.8%. The company targeted a 7% return on regulated equity (RORE) for K8, with an emphasis on efficiency and innovation. Their strategic priorities include improving water resources, tackling storm overflows, driving environmental gains, and supporting customers, with a strong focus on affordability and service quality. The outlook for the next fiscal year anticipates a 2/3 increase in EBITDA and a robust return to profitability.

Pennon Group plc Financial Statement Overview

Summary
Pennon Group plc shows revenue growth but faces profitability challenges with declining net income and margins. The balance sheet indicates increasing leverage, posing potential risks. Cash flow concerns arise from negative free cash flow, although operating cash flow generation is a strength.
Income Statement
67
Positive
The company has shown a positive revenue growth trend, with a notable increase in total revenue from £624.1 million in 2021 to £1.048 billion in 2025. However, the net income has significantly declined, leading to a negative net profit margin in recent years. Gross profit margin remains strong, but declining EBIT and EBITDA margins indicate pressure on operational efficiency.
Balance Sheet
55
Neutral
The debt-to-equity ratio has increased over the years, reflecting higher leverage, which could pose risks if not managed properly. The return on equity has suffered due to net losses, and while the equity ratio remains stable, the increasing liabilities are a concern.
Cash Flow
60
Neutral
Operating cash flow has declined, and free cash flow is negative, indicating cash flow challenges. The company's increased capital expenditures are affecting free cash flow. However, the ability to generate operating cash flow relative to net income is a positive aspect.
BreakdownTTMDec 2025Dec 2024Dec 2023Dec 2022Dec 2021
Income Statement
Total Revenue985.40M1.05B906.80M797.20M792.30M624.10M
Gross Profit926.70M995.90M856.00M506.70M532.30M411.60M
EBITDA276.10M302.90M319.90M261.00M368.60M310.50M
Net Income-41.20M-57.90M-9.50M100.00K15.40M79.50M
Balance Sheet
Total Assets6.47B7.05B6.23B5.19B5.34B6.42B
Cash, Cash Equivalents and Short-Term Investments137.00M417.90M145.40M165.40M519.00M2.92B
Total Debt4.42B4.54B3.97B3.13B3.20B2.85B
Total Liabilities5.46B5.60B5.07B4.06B4.06B3.44B
Stockholders Equity1.01B1.45B1.16B1.12B1.27B2.98B
Cash Flow
Free Cash Flow-484.20M-575.10M-450.00M-173.70M25.90M15.90M
Operating Cash Flow173.20M93.50M148.90M157.50M254.90M206.20M
Investing Cash Flow-744.00M-676.40M-658.00M-330.50M-639.60M3.44B
Financing Cash Flow646.50M866.80M510.80M-180.60M-2.02B-1.43B

Pennon Group plc Technical Analysis

Technical Analysis Sentiment
Negative
Last Price476.40
Price Trends
50DMA
484.75
Negative
100DMA
477.82
Negative
200DMA
449.36
Positive
Market Momentum
MACD
-2.00
Positive
RSI
43.09
Neutral
STOCH
23.19
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 476.4 is below the 20-day moving average (MA) of 489.20, below the 50-day MA of 484.75, and above the 200-day MA of 449.36, indicating a neutral trend. The MACD of -2.00 indicates Positive momentum. The RSI at 43.09 is Neutral, neither overbought nor oversold. The STOCH value of 23.19 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

Overall Rating
UnderperformOutperform
Sector (67)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
73
Outperform
£51.94B16.988.35%4.46%-7.42%5.84%
71
Outperform
£7.78B6.18-5.95%2.55%-4.82%-123.58%
71
Outperform
£19.64B16.5012.29%3.66%-3.11%-31.10%
67
Neutral
$17.59B18.195.33%3.63%7.33%12.21%
67
Neutral
£7.96B30.0713.05%4.50%10.04%
60
Neutral
£7.80B33.8212.73%4.70%3.78%50.18%
58
Neutral
£2.28B-4.44%7.16%15.42%-406.43%
* Utilities Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
GB:PNN
Pennon Group plc
476.40
41.07
9.43%
GB:CNA
Centrica
161.30
37.18
29.95%
GB:SVT
Severn Trent
2,590.00
169.52
7.00%
GB:SSE
SSE
1,754.50
-53.14
-2.94%
GB:UU
United Utilities
1,152.00
183.40
18.93%
GB:NG
National Grid
1,048.00
100.50
10.61%

Pennon Group plc Corporate Events

Regulatory Filings and Compliance
Pennon Group Announces Total Voting Rights and Capital
Neutral
Aug 1, 2025

Pennon Group plc has announced its total voting rights and capital as of July 31, 2025. The company’s issued share capital consists of 471,977,902 ordinary shares, with 5,628 shares held in treasury, resulting in a total of 471,972,274 voting rights. This figure is important for shareholders to determine their notification requirements under the FCA’s Disclosure Guidance and Transparency Rules.

The most recent analyst rating on (GB:PNN) stock is a Buy with a £8.00 price target. To see the full list of analyst forecasts on Pennon Group plc stock, see the GB:PNN Stock Forecast page.

Business Operations and StrategyRegulatory Filings and Compliance
Pennon Group Director Purchases Shares, Signaling Confidence
Positive
Jul 25, 2025

Pennon Group plc announced a transaction involving Andrea Blance, a Non-Executive Director, who purchased 2,000 ordinary shares at a price of £4.93 each. This transaction, conducted on the London Stock Exchange, reflects the company’s adherence to the EU Market Abuse Regulation and indicates confidence in the company’s future prospects.

The most recent analyst rating on (GB:PNN) stock is a Buy with a £7.40 price target. To see the full list of analyst forecasts on Pennon Group plc stock, see the GB:PNN Stock Forecast page.

Business Operations and StrategyFinancial Disclosures
Pennon Group CEO Executes Share Sale for Tax Liabilities
Neutral
Jul 25, 2025

Pennon Group plc announced a transaction involving its Group Chief Executive Officer, Susan Jane Davy, who sold shares to cover tax and national insurance liabilities. This transaction follows the vesting of shares under the company’s 2022 Annual Incentive Bonus Plan, marking a significant financial move for the executive and reflecting the company’s ongoing financial management strategies.

The most recent analyst rating on (GB:PNN) stock is a Buy with a £7.40 price target. To see the full list of analyst forecasts on Pennon Group plc stock, see the GB:PNN Stock Forecast page.

Shareholder MeetingsDividendsBusiness Operations and Strategy
Pennon Group plc Successfully Passes All AGM Resolutions
Positive
Jul 24, 2025

Pennon Group plc announced that all resolutions proposed at its Annual General Meeting on July 24, 2025, were passed by shareholders. The resolutions included approving the annual report, declaring a final dividend, electing and re-electing directors, appointing auditors, and authorizing various corporate actions. The successful passing of these resolutions supports the company’s governance and operational strategies, ensuring continued alignment with shareholder interests.

The most recent analyst rating on (GB:PNN) stock is a Buy with a £7.40 price target. To see the full list of analyst forecasts on Pennon Group plc stock, see the GB:PNN Stock Forecast page.

Business Operations and Strategy
Pennon Group Executives Purchase Shares to Align Interests
Neutral
Jul 22, 2025

Pennon Group plc announced transactions involving its Group Chief Executive Officer, Susan Jane Davy, and Group Chief Financial Officer, Laura Flowerdew, who both purchased shares under the company’s Share Incentive Plan. The transactions, conducted on the London Stock Exchange, reflect a strategic move to align the interests of the company’s leadership with those of its shareholders, potentially impacting stakeholder confidence and market perception.

The most recent analyst rating on (GB:PNN) stock is a Buy with a £7.40 price target. To see the full list of analyst forecasts on Pennon Group plc stock, see the GB:PNN Stock Forecast page.

Legal ProceedingsBusiness Operations and StrategyRegulatory Filings and Compliance
South West Water Agrees to £24m Investment Package Following Ofwat Investigation
Neutral
Jul 10, 2025

Ofwat has announced its findings for South West Water as part of a sector-wide investigation into wastewater activities. South West Water has agreed to an enforcement package worth £24 million, which includes investments to reduce environmental spills, tackle sewer misuse, and support environmental recovery, instead of facing a financial penalty. These measures are expected to improve customer service and environmental outcomes, aligning with the company’s broader plans to address storm overflows and enhance water quality.

The most recent analyst rating on (GB:PNN) stock is a Buy with a £7.40 price target. To see the full list of analyst forecasts on Pennon Group plc stock, see the GB:PNN Stock Forecast page.

Business Operations and Strategy
Pennon Group CFO Granted Options in Sharesave Scheme
Positive
Jul 8, 2025

Pennon Group plc announced a transaction involving Laura Flowerdew, the Group Chief Financial Officer, who was granted options under the company’s all-employee 2025 Sharesave scheme. This move is part of Pennon’s ongoing efforts to align employee incentives with company performance, potentially impacting stakeholder confidence and employee engagement positively.

The most recent analyst rating on (GB:PNN) stock is a Buy with a £7.40 price target. To see the full list of analyst forecasts on Pennon Group plc stock, see the GB:PNN Stock Forecast page.

Executive/Board ChangesBusiness Operations and Strategy
Pennon Group Announces Vesting of Long-Term Incentive Plan Awards
Neutral
Jul 1, 2025

Pennon Group plc has announced the vesting of the 2022 Long-Term Incentive Plan awards for its CEO, Susan Jane Davy, and CFO, Laura Flowerdew. The awards, which include dividend re-investment and rights issue adjustments, are subject to a two-year holding period. This move reflects the company’s commitment to aligning management incentives with long-term shareholder value, potentially impacting its operational focus and stakeholder relations.

The most recent analyst rating on (GB:PNN) stock is a Buy with a £7.40 price target. To see the full list of analyst forecasts on Pennon Group plc stock, see the GB:PNN Stock Forecast page.

Regulatory Filings and Compliance
Pennon Group Announces Total Voting Rights and Capital Structure
Neutral
Jul 1, 2025

Pennon Group plc announced its total voting rights and capital structure as of June 30, 2025, with an issued share capital of 471,977,902 ordinary shares, of which 5,628 are held in treasury. This results in a total of 471,972,274 voting rights, a figure that shareholders can use to assess their interests under FCA regulations.

The most recent analyst rating on (GB:PNN) stock is a Buy with a £7.40 price target. To see the full list of analyst forecasts on Pennon Group plc stock, see the GB:PNN Stock Forecast page.

Shareholder MeetingsFinancial DisclosuresRegulatory Filings and Compliance
Pennon Group Releases 2025 Annual Report and AGM Notice
Neutral
Jun 26, 2025

Pennon Group plc has published its Annual Report and Accounts for the year ending March 31, 2025, along with the Notice of its Annual General Meeting (AGM) scheduled for July 24, 2025. These documents are available on the company’s website and have been submitted to the National Storage Mechanism for inspection. The publication of these documents is a routine part of the company’s compliance with financial regulations and provides shareholders with detailed insights into the company’s performance and governance.

The most recent analyst rating on (GB:PNN) stock is a Buy with a £7.40 price target. To see the full list of analyst forecasts on Pennon Group plc stock, see the GB:PNN Stock Forecast page.

Business Operations and Strategy
Pennon Group Executives Invest in Company Shares
Positive
Jun 23, 2025

Pennon Group plc announced that its Group Chief Executive Officer, Susan Jane Davy, and Group Chief Financial Officer, Laura Flowerdew, have both purchased ordinary shares as part of a Share Incentive Plan. This transaction, conducted on the London Stock Exchange, reflects a strategic move to align the interests of the company’s leadership with its financial performance, potentially impacting stakeholder confidence positively.

The most recent analyst rating on (GB:PNN) stock is a Buy with a £7.40 price target. To see the full list of analyst forecasts on Pennon Group plc stock, see the GB:PNN Stock Forecast page.

Private Placements and FinancingBusiness Operations and Strategy
Pennon Group Enhances Financial Strategy with New Prospectus
Neutral
Jun 5, 2025

Pennon Group plc has announced the publication of a Supplementary Prospectus related to its GBP 2.5 billion Euro Medium Term Note Programme, which is guaranteed by South West Water Limited. This development is part of the company’s ongoing financial strategy to support its operations and maintain its market position in the utilities sector.

The most recent analyst rating on (GB:PNN) stock is a Buy with a £740.00 price target. To see the full list of analyst forecasts on Pennon Group plc stock, see the GB:PNN Stock Forecast page.

Regulatory Filings and Compliance
Pennon Group Announces Total Voting Rights and Capital Update
Neutral
Jun 4, 2025

Pennon Group plc announced its total voting rights and capital as of May 31, 2025, with an issued share capital consisting of 471,977,883 ordinary shares, of which 5,628 are held in treasury. This announcement informs shareholders of the total number of voting rights, which is 471,972,255 shares, a figure they can use to determine their notification requirements under the FCA’s rules.

The most recent analyst rating on (GB:PNN) stock is a Buy with a £740.00 price target. To see the full list of analyst forecasts on Pennon Group plc stock, see the GB:PNN Stock Forecast page.

Business Operations and StrategyFinancial Disclosures
Pennon Group’s Strategic Investments Set Stage for Future Growth Amid Financial Challenges
Positive
Jun 3, 2025

Pennon Group plc reported its full-year results for 2024/25, highlighting a resilient operational performance despite financial challenges. The company has undertaken significant capital investments to improve customer services and infrastructure, impacting profitability but setting a foundation for future growth. Pennon plans to increase customer bills for the first time in over a decade to support its ambitious investment plans, while maintaining strong investor support and a robust balance sheet. The company anticipates a return to profitability in 2025/26, driven by increased revenue and cost base adjustments.

The most recent analyst rating on (GB:PNN) stock is a Buy with a £7.40 price target. To see the full list of analyst forecasts on Pennon Group plc stock, see the GB:PNN Stock Forecast page.

Business Operations and Strategy
Pennon Group Executives Increase Stake in Company through Share Incentive Plan
Positive
May 20, 2025

Pennon Group plc announced transactions involving its top executives, CEO Susan Jane Davy and CFO Laura Flowerdew, who purchased shares to be included in a Share Incentive Plan (SIP). This move, conducted on the London Stock Exchange, reflects the company’s commitment to aligning management interests with shareholder value, potentially enhancing stakeholder confidence.

The most recent analyst rating on (GB:PNN) stock is a Buy with a £7.40 price target. To see the full list of analyst forecasts on Pennon Group plc stock, see the GB:PNN Stock Forecast page.

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.Date of analysis: Aug 22, 2025