United Utilities (UU) AI Stock Analysis

• Market Cap: £8.28B
• Dividend Yield: 4.3%
• Average Volume (3M): 1.91M
• Price to Earnings (P/E): 31.3
• Beta (1Y): 0.40
• Revenue Growth: 10.04%
• EPS Growth: 108.60%
• Country: UK
• Employees: 6,000
• Sector: Utilities
• Sector Strength: 65
• Industry: Regulated Water
• EPS (TTM): 0.23
• Shares Outstanding: 681,888,400
• 10 Day Avg. Volume: 1,575,852
• 30 Day Avg. Volume: 1,906,953
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• 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: £1,348.20
• Price Target Upside: 11.01% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 5

• Rating: 61 Neutral
• Price Target: 1,183.00p ▼(-2.59% Downside)

United Utilities' overall stock score reflects solid revenue growth and cost management, but is tempered by high leverage and negative free cash flow. Technical indicators suggest limited short-term price movement, and valuation metrics indicate potential overvaluation despite a decent dividend yield.

Positive Factors

Revenue Growth

A 10% revenue growth indicates strong demand for services and effective pricing strategies, supporting long-term business expansion and stability.

Cost Management

Maintaining a high gross profit margin shows effective cost control, which can lead to improved profitability and competitive pricing power.

Cash Generation

Strong operating cash flow relative to net income suggests the company efficiently converts sales into cash, supporting reinvestment and debt servicing.

Negative Factors

High Leverage

High leverage can increase financial risk, limit flexibility in downturns, and lead to higher interest expenses, impacting long-term financial health.

Negative Free Cash Flow

Negative free cash flow suggests potential liquidity issues, limiting the company's ability to fund operations, pay dividends, or reduce debt.

Modest Net Profit Margin

A modest net profit margin indicates limited profitability, which could affect the company's ability to reinvest in growth and compete effectively.

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 generates revenue primarily through the provision of water and wastewater services to its residential and commercial customers. The company's revenue model is largely based on regulated tariffs set by Ofwat, the economic regulator for the water sector in England and Wales. Key revenue streams include charges for water supply, sewage services, and infrastructure development. Additionally, UU earns revenue from non-regulated activities such as consultancy services, environmental projects, and partnerships with other organizations, which can provide supplementary income. The company's financial performance is also influenced by investments in infrastructure improvements, operational efficiencies, and customer service enhancements, which can lead to increased customer satisfaction and reduced operational costs.

United Utilities Financial Statement Overview

Summary

United Utilities demonstrates solid revenue growth and efficient cost management, but the high leverage and negative free cash flow pose potential risks. The company needs to focus on improving profitability and managing debt levels to enhance financial stability.

Income Statement

United Utilities shows strong revenue growth with a substantial increase of 10% from the previous year. The gross profit margin has remained robust at approximately 93%, indicating efficient cost management. However, the net profit margin is modest at around 12.3%, suggesting room for improvement in overall profitability.

Balance Sheet

The company's balance sheet reflects a high debt-to-equity ratio of 5.39, which indicates significant leverage and potential financial risk. The equity ratio stands at 11.9%, showing a relatively low proportion of equity financing. Return on equity is 13.2%, highlighting effective use of equity to generate income.

Cash Flow

Operating cash flow is strong compared to net income, indicating good cash generation from operations. However, free cash flow is negative, raising concerns about cash outflows exceeding inflows. The free cash flow to net income ratio is -0.3, pointing to potential liquidity challenges.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	2.15B	2.15B	1.95B	1.82B	1.86B	1.81B
Gross Profit	1.95B	2.00B	1.66B	754.10M	884.30M	874.30M
EBITDA	1.10B	1.19B	992.70M	1.18B	1.19B	1.16B
Net Income	264.70M	264.70M	126.90M	204.90M	-56.80M	453.40M
Balance Sheet
Total Assets	16.77B	16.77B	15.65B	14.53B	14.44B	14.18B
Cash, Cash Equivalents and Short-Term Investments	1.67B	1.67B	1.40B	340.40M	240.90M	744.10M
Total Debt	10.79B	10.79B	10.00B	8.44B	7.98B	8.45B
Total Liabilities	14.77B	14.77B	13.60B	12.02B	11.48B	11.15B
Stockholders Equity	2.00B	2.00B	2.06B	2.51B	2.96B	3.03B
Cash Flow
Free Cash Flow	-70.40M	-79.90M	-19.00M	93.50M	305.90M	221.80M
Operating Cash Flow	918.10M	918.10M	745.10M	787.50M	934.40M	865.80M
Investing Cash Flow	-987.20M	-987.20M	-731.40M	-593.40M	-639.70M	-555.70M
Financing Cash Flow	358.80M	358.80M	1.04B	-85.00M	-809.70M	-89.70M

United Utilities Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 1214.50
• 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 1214.5 is above the 20-day moving average (MA) of 1179.40, above the 50-day MA of 1152.47, and above the 200-day MA of 1074.05, indicating a bullish trend. The MACD of 20.36 indicates Negative momentum. The RSI at 67.10 is Neutral, neither overbought nor oversold. The STOCH value of 86.03 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
SSE	―	£20.92B	17.46	12.29%	3.40%	-3.11%	-31.10%
NG	―	£57.13B	18.68	8.35%	4.06%	-7.42%	5.84%
PNN	―	£2.51B	-37.48	-4.44%	6.38%	15.42%	-406.43%
Sector *	―	$17.65B	18.10	5.60%	3.62%	6.62%	11.55%
CNA	―	£8.15B	-35.66	-5.95%	2.74%	-4.82%	-123.58%
UU	―	£8.28B	31.29	13.05%	4.30%	10.04%	108.60%
SVT	―	£8.42B	36.69	12.73%	4.33%	3.78%	50.18%