Pennon Group PLC (GB:PNN)
LSE:PNN
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Pennon Group plc
(LSE:PNN)
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Rating:67Neutral
Price Target:
646.00 p
▲(16.50% Upside)
Action:ReiteratedDate: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.
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.
Read all positive and negative factors
Positive Factors
Negative 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.
Read all positive factors
Pennon Group plc (PNN) vs. iShares MSCI United Kingdom ETF (EWC)
Market Cap
£2.62B
Dividend Yield6.56%
Average Volume (3M)1.10M
Price to Earnings (P/E)9.6
Beta (1Y)1.09
Revenue Growth19.50%
EPS GrowthN/A
CountryUK
Employees4,000
SectorUtilities
Sector Strength65
IndustryRegulated Water
Share Statistics
EPS (TTM)0.14
Shares Outstanding471,977,970
10 Day Avg. Volume857,521
30 Day Avg. Volume1,097,750
Financial Highlights & Ratios
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 CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
£606.83Price Target Upside9.44% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
EPS Forecast (FY)0.36
Revenue Forecast (FY)£1.38B
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, Hampshir...
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 ...
Pennon Group plc Earnings Call Summary
Earnings Call Date:Nov 27, 2025
(Q2-2026)
| % Change Since: |
Next Earnings Date:May 28, 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
67
Positive
Balance Sheet
55
Neutral
Cash Flow
60
Neutral
| 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
Positive
554.50
Price Trends
554.92
Negative
537.10
Positive
507.53
Positive
Market Momentum
-6.51
Negative
55.75
Neutral
89.46
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:PNN, the sentiment is Positive. The current price of 554.5 is above the 20-day moving average (MA) of 534.05, below the 50-day MA of 554.92, and above the 200-day MA of 507.53, indicating a neutral trend. The MACD of -6.51 indicates Negative momentum. The RSI at 55.75 is Neutral, neither overbought nor oversold. The STOCH value of 89.46 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 |
|---|---|---|---|---|---|---|---|
72 Outperform | £9.30B | 8.14 | 20.43% | 4.45% | 15.76% | 254.82% | |
71 Outperform | £9.57B | 8.54 | 17.41% | 4.50% | 10.68% | 35.18% | |
69 Neutral | £2.99B | 0.40 | 3.94% | 2.78% | -19.04% | -34.52% | |
67 Neutral | £2.62B | 9.64 | 3.09% | 6.56% | 19.50% | ― | |
66 Neutral | $17.65B | 18.10 | 5.60% | 3.62% | 6.62% | 11.55% | |
63 Neutral | £1.06B | 21.07 | 27.40% | 7.01% | 1.71% | -12.49% | |
59 Neutral | £9.90B | -112.68 | 1.68% | 2.86% | -4.82% | -123.58% |
* Utilities Sector Average
GB:PNN
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554.50
146.79
36.00%
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Pennon Group plc Corporate Events
Regulatory Filings and Compliance
Pennon Group Updates Market on Total Voting Rights
Neutral
Mar 2, 2026
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 ...
Regulatory Filings and Compliance
Pennon CFO Increases Stake Through Share Incentive Plan
Neutral
Feb 23, 2026
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 co...
Business Operations and StrategyExecutive/Board Changes
Pennon Sets 1 April 2026 Start Date for New Chief Executive
Positive
Feb 10, 2026
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 Opera...
Regulatory Filings and Compliance
Pennon Updates Total Voting Rights and Share Capital
Neutral
Feb 2, 2026
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 prov...
Regulatory Filings and Compliance
Pennon Updates Market on Share Scheme Allotments and Remaining Capacity
Neutral
Feb 2, 2026
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 Jan...
Regulatory Filings and Compliance
Pennon CFO Acquires Shares Under Company Incentive Plan
Neutral
Jan 23, 2026
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 ...
Regulatory Filings and Compliance
Pennon Group Confirms Total Voting Rights at Year-End 2025
Neutral
Jan 2, 2026
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 inv...
Other
Pennon CEO and CFO Increase Holdings Through Share Incentive Plan
Positive
Dec 23, 2025
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...
Dividends
Pennon Group Updates FY26 Financial Calendar
Neutral
Dec 11, 2025
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 mai...
Regulatory Filings and Compliance
Pennon Group Chair Purchases Shares in Compliance with EU Regulations
Neutral
Dec 9, 2025
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 complia...
Business Operations and StrategyExecutive/Board Changes
Pennon Group Announces CEO Transition Plan
Neutral
Dec 9, 2025
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 Op...
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.