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United Utilities (UUGRY)
OTHER OTC:UUGRY
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United Utilities
(OTC:UUGRY)
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Rating:73Outperform
Price Target:
$42.00
â–²(12.90% Upside)
Action:UpgradedDate: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 Revenue Model
United Utilities earns revenue from Ofwat-set charges, producing predictable, tariff-based cash flows and regulatory reset mechanisms. This stability supports long-term investment planning for capex-heavy water assets, reduces demand volatility and underpins steady service revenues and dividends.
Strong Operating Cash Generation
Operating cash flow materially exceeding net income shows durable cash conversion from regulated operations. Reliable cash generation funds maintenance capex, routine improvements and customer programs, enabling sustained operations and the ability to service debt without reliance on short-term market swings.
Gearing within Target and Funding Flexibility
Net debt to RCV at ~60% sits inside the stated 55%-65% target, providing balance between investment and credit metrics. Proximity to Moody's threshold implies room to raise financing for AMP8 projects while preserving investment-grade access, supporting multi-year infrastructure delivery plans.
Negative Factors
High Leverage
A relatively high debt-to-equity and low equity ratio increase financial vulnerability: higher interest burdens and less cushion for shocks. In a capital-intensive regulated utility, elevated leverage limits optionality for incremental investment and raises refinancing risk if policy or rate assumptions shift.
Negative Free Cash Flow from High Capex
Sustained negative free cash flow driven by heavy capex means the business must rely on external financing or higher tariffs to fund growth. Over multiple AMP cycles this can compress returns and increase funding costs, reducing financial flexibility during adverse regulatory or demand scenarios.
Regulatory & Environmental Uncertainty
Pending regulatory changes, potential EPA methodology shifts and expected initial ODI penalties create structural risk to allowed returns and cost recovery. Unclear timelines and policy changes can alter investment economics and require additional remediation spend, impacting multi-year planning.
United Utilities (UUGRY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$12.71B
Dividend Yield4.28%
Average Volume (3M)26.05K
Price to Earnings (P/E)24.2
Beta (1Y)0.04
Revenue Growth19.58%
EPS Growth264.49%
CountryUS
Employees6,000
SectorUtilities
Sector Strength65
IndustryRegulated Water
Share Statistics
EPS (TTM)1.39
Shares Outstanding340,944,200
10 Day Avg. Volume19,128
30 Day Avg. Volume26,051
Financial Highlights & Ratios
PEG Ratio0.25
Price to Book (P/B)3.44
Price to Sales (P/S)3.20
P/FCF Ratio-86.04
Enterprise Value/Market Cap1.52
Enterprise Value/Revenue8.18
Enterprise Value/Gross Profit12.04
Enterprise Value/Ebitda14.68
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusHold
Number of Analyst Covering1
EPS Forecast (FY)2.75
Revenue Forecast (FY)$3.45B
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 generates revenue primarily through the provision of water and wastewater services to residential, commercial, and industrial customers. The company's revenue model is largely based on regulated prices set by the Water Services Regulation Authority (Ofwat), which allows them to charge customers for the water supplied and the sewage services provided. Key revenue streams include fixed charges for water supply, volumetric charges based on consumption, and sewerage charges. Additionally, United Utilities may earn income from service connections, infrastructure projects, and partnerships with local governments and other entities for environmental and water management initiatives. Their commitment to efficiency and sustainability also helps in mitigating costs and improving profit margins.
United Utilities Earnings Call Summary
Earnings Call Date:Nov 13, 2025
(Q2-2026)
| % Change Since: |
Next Earnings Date:May 21, 2026
Earnings Call Sentiment Neutral
The earnings call presented a balanced view with significant achievements in cash performance, regulatory engagement, and strong financial positioning. However, challenges regarding regulatory uncertainty, environmental ratings, and initial ODI penalties were notable concerns. The company expressed optimism about handling future investments and transformations.Q2-2026 Updates
Positive Updates
Strong Cash Performance and Customer Affordability
The company maintained strong cash performance despite an increase in bills, doubling the number of customers on affordability schemes to mitigate impact.
Positive Engagement with Regulators
Continued engagement with regulators to discuss growth opportunities, reopeners, and implementation of new investment drivers, showing a proactive approach to future challenges.
Flexibility in Funding and Strong Balance Sheet
Reported a strong balance sheet with 60% net debt to RCV gearing, with flexibility to extend beyond current levels due to the Moody's Baa1 threshold of 68%.
Focus on Innovation and Efficiency
Emphasis on driving transformation through standard assets and deployment to manage costs and deliver on totex commitments.
Positive Outlook on Environmental Super Cycle
The company highlighted potential opportunities arising from government policies, particularly in water infrastructure and data center investments.
Negative Updates
Disappointing EPA Rating
Received a 2-star rating from the EPA, highlighting challenges with energy resilience and pollution due to storms and power interruptions.
Uncertainty in Regulatory Framework
Concerns about the lack of clarity over future regulatory timelines and structures, with potential disruptions from upcoming white paper recommendations.
Potential for Increased Costs Due to Methodology Changes
Changes in categorization of pollutions in upcoming EPA methodology could lead to increased costs and challenges in maintaining current standards.
ODI Penalties Expected in Initial Year
Projected penalties for ODIs in the first year, although a net reward position is expected over the AMP period.
Company Guidance
In the recent United Utilities Fiscal '26 Interim Results Q&A session, the company provided guidance on several key metrics impacting their strategic outlook. The discussion highlighted their engagement with regulatory bodies concerning the AMP8 reopeners, focusing on asset health improvements and new investment drivers like PFAS and data centers. Expectations for the December white paper include 88 recommendations, emphasizing investor-friendly strategies and regulatory clarity. The company is pushing for a national social tariff to help with affordability as they double the number of customers on affordability schemes. Financially, United Utilities maintains robust metrics with a net debt to RCV gearing of 60%, benefiting from inflationary tailwinds, and a strong balance sheet within their 55%-65% target range. They anticipate a 100 basis point outperformance from financing, ODIs, and PCDs over AMP8, despite a penalty position this year, with improvements expected as infrastructure investments mature. The strategic policy statement from Ofwat and the EA is also anticipated in December, providing further direction for regulatory and environmental strategies.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.78
Positive
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.70
Positive
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.65
Positive
| 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
Positive
37.20
Price Trends
33.97
Positive
32.64
Positive
31.33
Positive
Market Momentum
0.99
Negative
67.17
Neutral
94.59
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For UUGRY, the sentiment is Positive. The current price of 37.2 is above the 20-day moving average (MA) of 35.99, above the 50-day MA of 33.97, and above the 200-day MA of 31.33, indicating a bullish trend. The MACD of 0.99 indicates Negative momentum. The RSI at 67.17 is Neutral, neither overbought nor oversold. The STOCH value of 94.59 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for UUGRY.
United Utilities Peers Comparison
UnderperformOutperform
Sector (66)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $12.71B | 24.22 | 19.97% | 4.28% | 19.58% | 264.49% | |
71 Outperform | $20.81B | 17.09 | 16.98% | 2.22% | -10.23% | -26.87% | |
69 Neutral | $11.37B | 18.20 | 9.44% | 3.48% | 21.35% | 20.96% | |
67 Neutral | $26.44B | 23.88 | 10.50% | 2.51% | 12.29% | 13.13% | |
66 Neutral | $17.65B | 18.10 | 5.60% | 3.62% | 6.62% | 11.55% | |
62 Neutral | $2.92B | 22.14 | 13.22% | 2.64% | 10.28% | 13.56% | |
61 Neutral | $2.71B | 20.97 | 7.71% | 2.88% | -2.60% | -33.78% |
* Utilities Sector Average
UUGRY
United Utilities
37.20
13.71
58.33%
AWR
American States Water
74.79
-1.32
-1.73%
AWK
American Water
135.44
-0.71
-0.52%
WTRG
Essential Utilities
40.15
2.40
6.35%
CWT
California Water Service
45.39
0.34
0.75%
SBS
Companhia De Saneamento
29.61
14.53
96.37%
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.