Pennon Group plc (PNN) AI Stock Analysis

• Market Cap: £2.68B
• Dividend Yield: 6.56%
• Average Volume (3M): 1.10M
• Price to Earnings (P/E): 9.6
• Beta (1Y): 0.87
• Revenue Growth: 19.50%
• EPS Growth: N/A
• Country: UK
• Employees: 4,000
• Sector: Utilities
• Sector Strength: 65
• Industry: Regulated Water
• EPS (TTM): 0.14
• Shares Outstanding: 471,975,650
• 10 Day Avg. Volume: 857,521
• 30 Day Avg. Volume: 1,097,750
• PEG Ratio: -0.06
• Price to Book (P/B): 0.88
• Price to Sales (P/S): 1.22
• P/FCF Ratio: -2.23
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: £597.17
• Price Target Upside: 4.67% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6
• EPS Forecast (FY): 0.29
• Revenue Forecast (FY): £1.28B

• Rating: 67 Neutral
• Price Target: 646.00p ▲(13.23% Upside)
• Action: Reiterated Date: 12/07/25
• Date: Action: Reiterated 12/07/25

Pennon Group's overall stock score reflects a mix of strengths and challenges. The most significant factor is the company's financial performance, which shows revenue growth but also highlights profitability and leverage concerns. Technical analysis indicates positive momentum, while the high P/E ratio suggests potential overvaluation. The earnings call and corporate events provide optimism with strong operational achievements and strategic initiatives.

Positive Factors

Regulated revenue visibility

Pennon operates in a regulated monopoly for water and wastewater where multi-year Ofwat price reviews set allowed revenues and returns. This framework creates predictable cash flows and durable investment recovery through the regulated asset base, supporting multi-year planning and stability.

Sustained revenue growth

Material revenue growth driven by higher tariffs and customer consumption has expanded the business scale and the regulated asset base. Sustained top-line growth underpins long-term service investment, supports future allowed returns, and provides a base to absorb operating cost inflation over multiple regulatory periods.

Improving operational & environmental outcomes

Significant cuts in pollution incidents and storm overflows reduce regulatory penalties, reputational risk and ODI downside. Persistent operational improvement strengthens regulatory credibility ahead of price reviews, lowering the probability of punitive outcomes and supporting allowed returns over the medium term.

Negative Factors

Rising financial leverage

Higher leverage increases refinancing and interest-rate exposure and reduces financial flexibility. Even with recent successful debt raises and gearing around 60%, elevated leverage constrains capacity for discretionary investment, heightens covenant and liquidity risk in adverse conditions.

Negative free cash flow

Negative free cash flow amid rising capex means the business depends on external financing to fund mandated investment. That pressures balance sheet resilience and raises long-term funding costs, constraining the firm's ability to self-fund future K8 commitments and environmental programs.

Profitability and margin pressure

Declining net income and squeezed EBIT/EBITDA margins reduce retained earnings and weaken capacity to self-finance investment or cushion regulatory penalties. Ongoing margin pressure from costs, ODIs and network issues undermines sustainable profitability through the next regulatory cycles.

Pennon Group plc Business Overview & Revenue Model

Company Description

Pennon 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 Money

Pennon Group generates revenue primarily through its regulated water and wastewater services, which involve charging customers for the provision and treatment of water and the disposal of wastewater. This revenue is essentially driven by customer billing based on usage and is regulated by the UK's water regulator, Ofwat, which sets price limits that the company can charge. Additionally, the group earns income from commercial services offered through Pennon Water Services, which includes consultancy and efficiency optimization for businesses looking to manage their water use more effectively. Significant partnerships with local authorities and businesses enhance its operational capacity and revenue potential, while ongoing investments in infrastructure and sustainability initiatives aim to reduce costs and improve service delivery, contributing positively to overall earnings.

Pennon Group plc Financial Statement Overview

Summary

Pennon Group is experiencing revenue growth, but profitability challenges are evident with declining net income and margins. The balance sheet shows increasing leverage, which could impact financial stability. Cash flow concerns arise from negative free cash flow, although operating cash flow generation is a strength. The company needs to address profitability and leverage for improved financial health.

Income Statement

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

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

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.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	917.90M	1.05B	906.80M	797.20M	792.30M	624.10M
Gross Profit	702.10M	995.90M	856.00M	506.70M	532.30M	411.60M
EBITDA	337.30M	302.90M	319.90M	261.00M	368.60M	310.50M
Net Income	43.40M	-57.90M	-9.50M	100.00K	15.40M	79.50M
Balance Sheet
Total Assets	7.38B	7.05B	6.23B	5.19B	5.34B	6.42B
Cash, Cash Equivalents and Short-Term Investments	489.00M	417.90M	145.40M	165.40M	519.00M	2.92B
Total Debt	4.87B	4.54B	3.97B	3.13B	3.20B	2.85B
Total Liabilities	6.02B	5.60B	5.07B	4.06B	4.06B	3.44B
Stockholders Equity	1.36B	1.45B	1.16B	1.12B	1.27B	2.98B
Cash Flow
Free Cash Flow	-258.55M	-575.10M	-450.00M	-173.70M	25.90M	15.90M
Operating Cash Flow	181.95M	93.50M	148.90M	157.50M	254.90M	206.20M
Investing Cash Flow	-596.20M	-676.40M	-658.00M	-330.50M	-639.60M	3.44B
Financing Cash Flow	764.50M	866.80M	510.80M	-180.60M	-2.02B	-1.43B

Pennon Group plc Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 570.50
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:PNN, the sentiment is Neutral. The current price of 570.5 is below the 20-day moving average (MA) of 578.20, above the 50-day MA of 552.00, and above the 200-day MA of 500.39, indicating a neutral trend. The MACD of 9.51 indicates Positive momentum. The RSI at 49.12 is Neutral, neither overbought nor oversold. The STOCH value of 31.15 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for GB:PNN.

Pennon Group plc Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
UU	72 Outperform	£9.17B	8.14	20.43%	4.45%	15.76%	254.82%
SVT	71 Outperform	£9.54B	8.54	17.41%	4.50%	10.68%	35.18%
DRX	69 Neutral	£2.92B	0.40	19.64%	2.78%	-19.04%	-34.52%
PNN	67 Neutral	£2.68B	9.64	2.50%	6.56%	19.50%	―
Sector *	66 Neutral	$17.65B	18.10	5.60%	3.62%	6.62%	11.55%
TEP	63 Neutral	£1.07B	21.07	28.80%	7.01%	1.71%	-12.49%
CNA	59 Neutral	£8.72B	-112.68	-5.95%	2.86%	-4.82%	-123.58%

Pennon Group plc Corporate Events

Pennon Group Updates Market on Total Voting Rights

Pennon Group plc has confirmed that as of 28 February 2026 its issued share capital comprises 471,981,269 ordinary shares, of which 5,628 are held in treasury and do not carry voting rights. This leaves a total of 471,975,641 voting shares in the company, a figure shareholders must use as the denominator when assessing whether changes in their holdings trigger regulatory disclosure obligations under U.K. transparency rules.

The announcement provides clarity for investors and regulators on the company’s current voting rights base, which is crucial for monitoring significant shareholdings and compliance with disclosure thresholds. By updating the market on its total voting rights, Pennon supports transparent governance and facilitates accurate reporting of ownership changes by stakeholders in line with FCA requirements.

The most recent analyst rating on (GB:PNN) stock is a Hold with a £652.00 price target. To see the full list of analyst forecasts on Pennon Group plc stock, see the GB:PNN Stock Forecast page.

Pennon CFO Increases Stake Through Share Incentive Plan

Pennon Group has disclosed a routine share transaction involving its group chief financial officer, Laura Flowerdew, under EU Market Abuse Regulation reporting rules. Flowerdew purchased partnership shares and received matching shares under the company’s Share Incentive Plan, a move that modestly increases her equity stake and signals continued use of share-based reward structures for senior management.

The transaction, conducted on the London Stock Exchange on 19 February 2026, involved a small volume of ordinary shares at a price of 572p for the purchased element, with additional matching shares awarded at no cost. While limited in scale, the disclosure underscores Pennon’s adherence to transparency requirements on dealings by persons discharging managerial responsibilities, offering stakeholders visibility into executive alignment with shareholder interests.

The most recent analyst rating on (GB:PNN) stock is a Hold with a £636.00 price target. To see the full list of analyst forecasts on Pennon Group plc stock, see the GB:PNN Stock Forecast page.

Pennon Sets 1 April 2026 Start Date for New Chief Executive

Pennon Group plc has confirmed that Keith Haslett will take up the role of Chief Executive Officer on 1 April 2026, succeeding Susan Davy following the completion of his notice period at Affinity Water. Until his arrival, the company’s Operating Committee will continue to support Executive Chair David Sproul in delivering the Group’s strategy, after which Sproul will revert to his position as Non-Executive Chairman on the same date.

The succession plan underlines continuity in Pennon’s leadership and strategic direction at a time of ongoing regulatory and operational pressures in the U.K. water sector. By clearly staging the transition and restoring the traditional separation between executive management and the chair role, the group aims to provide stability for investors, employees, and regulators while maintaining focus on its long-term strategic objectives.

The most recent analyst rating on (GB:PNN) stock is a Buy with a £680.00 price target. To see the full list of analyst forecasts on Pennon Group plc stock, see the GB:PNN Stock Forecast page.

Pennon Updates Total Voting Rights and Share Capital

Pennon Group plc has confirmed that, as of 31 January 2026, its issued share capital comprises 471,981,269 ordinary shares, of which 5,628 are held in treasury, resulting in 471,975,641 voting shares in issue. The updated voting rights figure provides the reference denominator shareholders must use to determine whether they are required to disclose new or changed holdings under the FCA’s Disclosure Guidance and Transparency Rules, ensuring ongoing compliance and transparency in the company’s shareholder base.

The most recent analyst rating on (GB:PNN) stock is a Buy with a £680.00 price target. To see the full list of analyst forecasts on Pennon Group plc stock, see the GB:PNN Stock Forecast page.

Pennon Updates Market on Share Scheme Allotments and Remaining Capacity

Pennon Group plc reported its latest six‑monthly block listing return for its employee share schemes, showing modest utilisation under the Pennon Group Sharesave Scheme, with 3,367 shares issued during the period from 1 August 2025 to 31 January 2026, leaving 1,214,018 shares still available for future allotment. Under the Pennon Group Executive Share Option Scheme, no shares were issued in the period, and the balance of 9,775 unallotted securities remains unchanged, indicating limited recent dilution from these long‑term incentive plans and continued capacity to support future employee and executive share participation.

The most recent analyst rating on (GB:PNN) stock is a Buy with a £680.00 price target. To see the full list of analyst forecasts on Pennon Group plc stock, see the GB:PNN Stock Forecast page.

Pennon CFO Acquires Shares Under Company Incentive Plan

Pennon Group has disclosed a routine share transaction involving its Group Chief Financial Officer, Laura Flowerdew, in line with EU Market Abuse Regulation requirements. Flowerdew purchased 27 ordinary shares and received 9 matching shares under the company’s Share Incentive Plan on 19 January 2026, a standard executive participation in equity-based remuneration that incrementally aligns management’s interests with shareholders without indicating any broader strategic shift for the group.

The most recent analyst rating on (GB:PNN) stock is a Buy with a £680.00 price target. To see the full list of analyst forecasts on Pennon Group plc stock, see the GB:PNN Stock Forecast page.

Pennon Group Confirms Total Voting Rights at Year-End 2025

Pennon Group plc has confirmed that, as of 31 December 2025, its issued share capital comprises 471,980,296 ordinary shares, of which 5,628 are held in treasury, resulting in 471,974,668 voting rights. The updated voting rights figure provides investors with the denominator needed to assess and report any notifiable holdings or changes in their share ownership under UK financial disclosure and transparency rules, supporting ongoing market transparency and regulatory compliance for shareholders and the company.

The most recent analyst rating on (GB:PNN) stock is a Sell with a £450.00 price target. To see the full list of analyst forecasts on Pennon Group plc stock, see the GB:PNN Stock Forecast page.

Pennon CEO and CFO Increase Holdings Through Share Incentive Plan

Pennon Group has disclosed that its Group Chief Executive Officer, Susan Jane Davy, and Group Chief Financial Officer, Laura Flowerdew, have each purchased ordinary shares in the company to be held within its Share Incentive Plan. The transactions, executed on 19 December 2025 on the London Stock Exchange, involved the acquisition of 29 ordinary shares of 61.05p each at a price of 515p per share for both executives, signalling ongoing alignment of senior management’s interests with those of shareholders through increased personal equity participation.

The most recent analyst rating on (GB:PNN) stock is a Sell with a £450.00 price target. To see the full list of analyst forecasts on Pennon Group plc stock, see the GB:PNN Stock Forecast page.

Pennon Group Updates FY26 Financial Calendar

Pennon Group plc has updated its financial calendar for the fiscal year 2026, correcting the record date for its interim dividend to 30 January 2026, with payment scheduled for 2 April 2026. This adjustment ensures clarity for stakeholders and maintains transparency in the company’s financial operations, with no other changes to the previously announced timetable.

The most recent analyst rating on (GB:PNN) stock is a Hold with a £586.00 price target. To see the full list of analyst forecasts on Pennon Group plc stock, see the GB:PNN Stock Forecast page.

Pennon Group Chair Purchases Shares in Compliance with EU Regulations

Pennon Group plc has announced a transaction involving its Chair, David Sproul, who has purchased 4,635 ordinary shares at a price of £5.36 each. This transaction, conducted on the London Stock Exchange, is part of the company’s compliance with the EU Market Abuse Regulation, highlighting transparency in managerial dealings.

The most recent analyst rating on (GB:PNN) stock is a Hold with a £586.00 price target. To see the full list of analyst forecasts on Pennon Group plc stock, see the GB:PNN Stock Forecast page.

Pennon Group Announces CEO Transition Plan

Pennon Group plc has announced a transition in its executive leadership, with CEO Susan Davy set to retire at the end of December 2025. David Sproul, the current Chair, will take on the role of Executive Chair from January 2026, supported by an Operating Committee, until the new CEO, Keith Haslett, joins by June 2026. This transition is part of a strategic succession plan to ensure continuity and maintain the company’s operational and financial momentum.

The most recent analyst rating on (GB:PNN) stock is a Hold with a £586.00 price target. To see the full list of analyst forecasts on Pennon Group plc stock, see the GB:PNN Stock Forecast page.