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United Utilities (Uk) (GB:UU)
:UU

United Utilities (UU) AI Stock Analysis

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United Utilities

(LSE:UU)

Rating:64Neutral
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 (UU) vs. iShares MSCI United Kingdom ETF (EWC)

United Utilities Business Overview & Revenue Model

Company DescriptionUnited 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 MoneyUnited 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
65
Positive
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
58
Neutral
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
60
Neutral
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
TTMMar 2024Mar 2023Mar 2022Mar 2021Mar 2020
Income StatementTotal Revenue
2.05B1.95B1.82B1.86B1.81B1.86B
Gross Profit
1.38B1.66B754.10M884.30M874.30M908.40M
EBIT
576.90M480.20M441.40M641.50M641.00M688.00M
EBITDA
980.20M992.70M1.18B1.19B1.16B1.06B
Net Income Common Stockholders
113.20M126.90M204.90M-56.80M453.40M106.80M
Balance SheetCash, Cash Equivalents and Short-Term Investments
247.80M1.40B340.40M240.90M744.10M528.10M
Total Assets
12.43B15.65B14.53B14.44B14.18B14.04B
Total Debt
7.38B10.00B8.44B7.98B8.45B8.36B
Net Debt
7.38B8.60B8.43B7.74B7.71B7.83B
Total Liabilities
9.60B13.60B12.02B11.48B11.15B11.08B
Stockholders Equity
2.82B2.06B2.51B2.96B3.03B2.96B
Cash FlowFree Cash Flow
8.80M-19.00M93.50M305.90M221.80M135.20M
Operating Cash Flow
837.50M745.10M787.50M934.40M865.80M815.20M
Investing Cash Flow
-1.54B-731.40M-593.40M-639.70M-555.70M-598.80M
Financing Cash Flow
1.40B1.04B-85.00M-809.70M-89.70M-27.80M

United Utilities Technical Analysis

Technical Analysis Sentiment
Positive
Last Price1152.50
Price Trends
50DMA
1084.20
Positive
100DMA
1033.06
Positive
200DMA
1038.88
Positive
Market Momentum
MACD
22.70
Negative
RSI
60.44
Neutral
STOCH
81.66
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

Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
GBCNA
79
Outperform
£7.96B6.3932.10%2.78%-24.74%-63.34%
GBNG
73
Outperform
£51.00B16.888.35%4.49%-7.42%5.84%
GBSVT
71
Outperform
£7.98B34.6712.73%4.58%5.38%86.34%
GBSSE
71
Outperform
£19.24B16.1812.29%3.51%-13.09%231.40%
GBUU
64
Neutral
£7.86B29.6913.05%4.38%8.61%
64
Neutral
$8.61B10.334.70%4.36%4.14%-13.05%
GBPNN
56
Neutral
£2.30B-4.44%7.24%20.25%-128.71%
* Utilities Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
GB:UU
United Utilities
1,152.50
189.61
19.69%
GB:CNA
Centrica
161.00
30.34
23.22%
GB:PNN
Pennon Group plc
480.40
36.61
8.25%
GB:SVT
Severn Trent
2,660.00
361.88
15.75%
GB:SSE
SSE
1,736.00
13.19
0.77%
GB:NG
National Grid
1,036.00
210.43
25.49%
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.