United Utilities (UU) AI Stock Analysis

• Market Cap: £7.86B
• Dividend Yield: 4.38%
• Average Volume (3M): 1.99M
• Price to Earnings (P/E): 29.7
• Beta (1Y): 0.56
• Revenue Growth: 8.61%
• EPS Growth: N/A
• Country: UK
• Employees: 6,000
• Sector: Utilities
• Sector Strength: 82
• Industry: Regulated Water
• EPS (TTM): 0.23
• Shares Outstanding: 681,888,400
• 10 Day Avg. Volume: 2,262,022
• 30 Day Avg. Volume: 1,986,452
• PEG Ratio: -6.03
• Price to Book (P/B): 3.91
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 860.88
• 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: £1,208.33
• Price Target Upside: 4.84% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6

• Rating: 64 Neutral
• Price Target: ―

United Utilities' stock score reflects stable revenue growth but is hindered by profitability challenges and high leverage. Positive technical indicators suggest potential for short-term gains, while a high P/E ratio indicates overvaluation. The attractive dividend yield provides some balance, but liquidity concerns and high debt levels are key risks.

Positive Factors

Dividend Policy

The announcement of the continuation of the existing dividend policy reflects annual growth in line with CPIH, which is a de-risking event.

Earnings Guidance

Initial FY26 guidance suggests upward pressure on consensus.

Negative Factors

Regulatory Challenges

For this first year of the regulatory period, FY26, the company expects to be in penalty territory on customer ODIs.

United Utilities Business Overview & Revenue Model

Company Description

United Utilities Group PLC provides water and wastewater services in the United Kingdom. It is also involved in the renewable energy generation, corporate trustee, financing, and property management activities; and provision of consulting, and project management services. The company operates 42,000 kilometers of water pipes; and 78,000 km of wastewater pipes. United Utilities Group PLC was incorporated in 2008 and is based in Warrington, the United Kingdom.

How the Company Makes Money

United Utilities makes money primarily through the provision of water and wastewater services to residential, commercial, and industrial customers. The company generates revenue by charging customers for water supply and wastewater treatment, which are regulated and subject to pricing controls set by Ofwat, the economic regulator for the water sector in England and Wales. Revenue is largely predictable due to the essential nature of its services and the regulatory framework that ensures fair return on investment. Additionally, United Utilities may engage in activities like renewable energy generation and infrastructure services, which can contribute to its revenue streams. However, the core revenue driver remains its regulated water and wastewater operations.

United Utilities Financial Statement Overview

Summary

United Utilities shows stable revenue growth but faces profitability challenges and high leverage risks. The income statement reveals a decrease in net profit margin despite revenue growth. The balance sheet is concerning due to high debt levels, and cash flow analysis indicates negative free cash flow, posing liquidity concerns.

Income Statement

United Utilities shows a mixed performance in its income statement. The gross profit margin has been stable, but the net profit margin decreased significantly from the previous year, indicating increased costs or decreased efficiency. Revenue grew by 6.83% from the previous year, which is a positive sign. However, the EBIT margin and EBITDA margin have remained relatively stable, suggesting challenges in improving operational profitability.

Balance Sheet

The balance sheet reveals a high debt-to-equity ratio, reflecting significant leverage which poses financial risk. The return on equity has decreased due to lower net income, indicating reduced profitability for shareholders. The equity ratio is relatively low, suggesting heavy reliance on debt financing, which could be a concern if interest rates rise.

Cash Flow

Cash flow analysis indicates a decline in free cash flow, turning negative in the latest year, which raises concerns about liquidity. The operating cash flow to net income ratio is favorable, suggesting strong cash generation relative to net income. However, the free cash flow to net income ratio is negative, highlighting potential cash management issues.

Breakdown
TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Income Statement		Total Revenue
2.05B	1.95B	1.82B	1.86B	1.81B	1.86B
	Gross Profit
1.38B	1.66B	754.10M	884.30M	874.30M	908.40M
	EBIT
576.90M	480.20M	441.40M	641.50M	641.00M	688.00M
	EBITDA
980.20M	992.70M	1.18B	1.19B	1.16B	1.06B
	Net Income Common Stockholders
113.20M	126.90M	204.90M	-56.80M	453.40M	106.80M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
247.80M	1.40B	340.40M	240.90M	744.10M	528.10M
	Total Assets
12.43B	15.65B	14.53B	14.44B	14.18B	14.04B
	Total Debt
7.38B	10.00B	8.44B	7.98B	8.45B	8.36B
	Net Debt
7.38B	8.60B	8.43B	7.74B	7.71B	7.83B
	Total Liabilities
9.60B	13.60B	12.02B	11.48B	11.15B	11.08B
	Stockholders Equity
2.82B	2.06B	2.51B	2.96B	3.03B	2.96B
Cash Flow		Free Cash Flow
8.80M	-19.00M	93.50M	305.90M	221.80M	135.20M
	Operating Cash Flow
837.50M	745.10M	787.50M	934.40M	865.80M	815.20M
	Investing Cash Flow
-1.54B	-731.40M	-593.40M	-639.70M	-555.70M	-598.80M
	Financing Cash Flow
1.40B	1.04B	-85.00M	-809.70M	-89.70M	-27.80M

United Utilities Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 1152.50
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:UU, the sentiment is Positive. The current price of 1152.5 is above the 20-day moving average (MA) of 1128.38, above the 50-day MA of 1084.20, and above the 200-day MA of 1038.88, indicating a bullish trend. The MACD of 22.70 indicates Negative momentum. The RSI at 60.44 is Neutral, neither overbought nor oversold. The STOCH value of 81.66 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GB:UU.

United Utilities Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CNA	79 Outperform	£7.96B	6.39	32.10%	2.78%	-24.74%	-63.34%
NG	73 Outperform	£51.00B	16.88	8.35%	4.49%	-7.42%	5.84%
SVT	71 Outperform	£7.98B	34.67	12.73%	4.58%	5.38%	86.34%
SSE	71 Outperform	£19.24B	16.18	12.29%	3.51%	-13.09%	231.40%
UU	64 Neutral	£7.86B	29.69	13.05%	4.38%	8.61%	―
Sector *	64 Neutral	$8.61B	10.33	4.70%	4.36%	4.14%	-13.05%
PNN	56 Neutral	£2.30B	―	-4.44%	7.24%	20.25%	-128.71%