United Utilities (UUGRY) AI Stock Analysis

• Market Cap: $11.86B
• Dividend Yield: 4.28%
• Average Volume (3M): 26.05K
• Price to Earnings (P/E): 8.2
• Beta (1Y): 0.07
• Revenue Growth: 19.58%
• EPS Growth: 264.49%
• Country: US
• Employees: 6,000
• Sector: Utilities
• Sector Strength: 65
• Industry: Regulated Water
• EPS (TTM): 1.39
• Shares Outstanding: 340,944,200
• 10 Day Avg. Volume: 19,128
• 30 Day Avg. Volume: 26,051
• PEG Ratio: 0.25
• Price to Book (P/B): 3.44
• Price to Sales (P/S): 3.20
• P/FCF Ratio: -86.04
• Enterprise Value/Market Cap: 1.57
• Enterprise Value/Revenue: 7.87
• Enterprise Value/Gross Profit: 11.58
• Enterprise Value/Ebitda: 14.12
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: Hold
• Number of Analyst Covering: 1
• EPS Forecast (FY): 2.72
• Revenue Forecast (FY): $3.47B

• Rating: 73 Outperform
• Price Target: $40.00 ▲(15.54% Upside)
• Action: Upgraded Date: 12/07/25
• Date: Action: Upgraded 12/07/25

United Utilities shows strong technical performance and solid financial management, with positive momentum in the stock price. While the valuation suggests potential overvaluation, the attractive dividend yield compensates for this. The earnings call highlighted both achievements and challenges, with a focus on future growth and regulatory engagement.

Positive Factors

Regulated, predictable revenue model

Operating as the appointed water/wastewater provider in a defined region, United Utilities benefits from multi-year regulatory settlements that allow recovery of efficient costs and a return on its regulated asset base. This provides stable, long-duration cash flow visibility and underpins long-term investment planning.

Robust operating cash generation

Consistently strong operating cash flow that exceeds net income signals durable cash conversion from core regulated operations. This cash generation supports large, ongoing capex programs, dividend distributions and provides flexibility to manage financing needs across regulatory cycles, even with heavy investment.

Balance sheet gearing within target and flexibility

Net debt to RCV at ~60% sits inside the stated 55%-65% target, signalling disciplined gearing for a capital-intensive regulated utility. The cited headroom to credit thresholds gives funding flexibility for AMP8 investment and smoothing of financing over multi-year regulatory periods without immediate rating pressure.

Negative Factors

High leverage characteristic of sector

Material leverage increases sensitivity to interest rate moves and limits financial flexibility. For United Utilities, high debt-to-equity is typical for utilities but constrains options for large unplanned expenditures, increases refinancing risk over time, and requires careful covenant and liquidity management across regulatory cycles.

Negative free cash flow from capex needs

Sustained negative free cash flow reflects heavy, structural investment into networks and environmental obligations. While these investments are necessary for asset health and regulatory compliance, prolonged negative FCF increases reliance on external financing and can pressure dividend funding and credit metrics if capex efficiency or regulatory recovery slips.

Regulatory and environmental execution risk

Uncertainty over future regulatory frameworks and methodology changes can alter allowed returns, cost recovery and incentive structures. Coupled with a disappointing EPA rating and potential re-classification of pollution incidents, this elevates the risk of higher compliance costs, ODI penalties and additional capex beyond current plans.

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 regulated revenues earned from providing water supply and wastewater services to customers in its appointed service area. The core revenue stream is customer billing: (1) household and non-household water charges for potable water services (including metered and unmetered tariffs) and (2) wastewater/sewerage charges for collection and treatment of sewage and related services. Prices and the overall level of allowed revenue are set within a multi-year regulatory framework overseen by Ofwat (the economic regulator for the water sector in England and Wales). Under this model, the company is permitted to earn a return on its regulated asset base (infrastructure invested in to provide services), with revenues designed to recover efficient operating costs and fund capital investment while meeting service and performance obligations. A meaningful portion of earnings is therefore driven by the size of its regulated asset base and the allowed return parameters, alongside how efficiently it operates versus regulatory assumptions. In addition to base allowed revenues, performance mechanisms can adjust revenue up or down depending on outcomes such as service reliability, leakage, supply interruptions, wastewater incidents, customer service metrics, and environmental performance; this means operational performance can directly affect profitability through incentives and penalties. The company can also earn revenue from connections and developer services (e.g., new water and sewer connections tied to housing and commercial development) and other regulated or near-regulated charges associated with network access and service requests. Non-regulated or ancillary income may include services provided to other parties and various recoveries, but the company’s earnings are predominantly determined by the regulated water and wastewater business and the associated regulatory settlement, demand volumes, inflation/indexation mechanics embedded in the UK framework, and its ability to manage costs and deliver capital programs efficiently. Specific material partnerships contributing to earnings: null.

United Utilities Financial Statement Overview

Summary

United Utilities demonstrates solid revenue growth and efficient cost management. Despite strong cash flow from operations, high leverage and capital expenditures pose potential risks. The company maintains steady profitability, but careful debt management is crucial for future stability.

Income Statement

United Utilities shows strong growth with a revenue increase from the previous year, leading to an improved EBIT margin. The Gross Profit Margin is high, indicating efficient cost control. However, the Net Profit Margin reflects moderate profitability, impacted by high operational costs.

Balance Sheet

The company's Debt-to-Equity ratio is relatively high, suggesting significant leverage, which is common in the regulated utilities sector. While the Return on Equity is reasonable, indicating effective use of equity, the equity ratio is low, highlighting potential financial risk.

Cash Flow

Operating cash flow is robust and exceeds net income, reflecting strong cash generation capabilities. However, negative Free Cash Flow indicates high capital expenditure, which could strain liquidity if not managed carefully.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	2.37B	2.15B	1.95B	1.82B	1.86B	1.81B
Gross Profit	1.61B	2.00B	1.73B	754.10M	884.30M	874.30M
EBITDA	1.32B	1.19B	988.60M	1.18B	1.06B	1.06B
Net Income	401.03M	264.70M	126.90M	204.90M	-56.80M	453.40M
Balance Sheet
Total Assets	17.53B	16.77B	15.65B	14.53B	14.44B	14.18B
Cash, Cash Equivalents and Short-Term Investments	1.94B	1.67B	1.40B	340.40M	240.90M	744.10M
Total Debt	11.38B	10.79B	10.00B	8.44B	7.98B	8.45B
Total Liabilities	15.54B	14.77B	13.60B	12.02B	11.48B	11.15B
Stockholders Equity	1.99B	2.00B	2.06B	2.51B	2.96B	3.03B
Cash Flow
Free Cash Flow	-58.82M	-79.90M	-19.00M	93.50M	305.90M	221.80M
Operating Cash Flow	1.13B	918.10M	745.10M	787.50M	934.40M	865.80M
Investing Cash Flow	-873.40M	-987.20M	-731.40M	-593.40M	-639.70M	-555.70M
Financing Cash Flow	150.57M	358.80M	1.04B	-85.00M	-809.70M	-89.70M

United Utilities Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 34.62
• 50DMA: Negative
• 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 UUGRY, the sentiment is Neutral. The current price of 34.62 is below the 20-day moving average (MA) of 36.22, below the 50-day MA of 34.96, and above the 200-day MA of 31.76, indicating a neutral trend. The MACD of 0.10 indicates Positive momentum. The RSI at 41.75 is Neutral, neither overbought nor oversold. The STOCH value of 46.17 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for UUGRY.

United Utilities Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
UUGRY	73 Outperform	$11.86B	8.21	19.97%	4.28%	19.58%	264.49%
WTRG	71 Outperform	$11.46B	17.43	9.18%	3.48%	21.35%	20.96%
SBS	68 Neutral	$20.60B	10.77	20.64%	2.22%	-10.23%	-26.87%
Sector *	66 Neutral	$17.65B	18.10	5.60%	3.62%	6.62%	11.55%
AWK	64 Neutral	$26.76B	22.91	10.34%	2.51%	12.29%	13.13%
AWR	59 Neutral	$2.85B	21.42	13.10%	2.64%	10.28%	13.56%
CWT	58 Neutral	$2.64B	20.13	7.68%	2.88%	-2.60%	-33.78%