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Pennon Group plc
(LSE:PNN)
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Rating:47Neutral
Price Target:
318.00 p
▼(-32.77% Downside)
Action:Reiterated
Date:10/13/26
The score is held down primarily by financial risk factors—high leverage and persistently negative free cash flow—despite a notable FY2026 earnings rebound. Technicals also remain weak with the stock trading far below major moving averages and negative momentum. Valuation provides partial support via a moderate P/E and high dividend yield, but the yield’s attractiveness is moderated by cash flow deficits.
Positive Factors
Essential regulated utility model
Pennon delivers essential water and wastewater services, creating recurring demand across households and businesses. Its regulated operating model provides an established framework for revenue recovery and permitted returns, supporting business continuity and long-term infrastructure relevance.
Negative Factors
High financial leverage
Pennon’s high debt burden relative to equity leaves its capital structure less flexible. Elevated leverage can increase financing demands, constrain future investment choices, and make the company more vulnerable when profitability or operating conditions weaken.
Read all positive and negative factors
Positive Factors
Negative Factors
Essential regulated utility model
Pennon delivers essential water and wastewater services, creating recurring demand across households and businesses. Its regulated operating model provides an established framework for revenue recovery and permitted returns, supporting business continuity and long-term infrastructure relevance.
Read all positive factors
Pennon Group plc (PNN) vs. iShares MSCI United Kingdom ETF (EWC)
Market Cap
£2.40B
Dividend Yield9.54%
Average Volume (3M)4.35M
Price to Earnings (P/E)18.0
Beta (1Y)1.05
Revenue Growth23.25%
EPS GrowthN/A
CountryUK
Employees3,809
SectorUtilities
Sector Strength65
IndustryRegulated Water
Share Statistics
EPS (TTM)0.19
Shares Outstanding692,239,440
10 Day Avg. Volume4,989,480
30 Day Avg. Volume4,347,251
Financial Highlights & Ratios
PEG Ratio-0.13
Price to Book (P/B)1.77
Price to Sales (P/S)1.93
P/FCF Ratio-9.86
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
£424.86Price Target Upside-10.18% Downside
Rating ConsensusModerate Buy
Number of Analyst Covering7
EPS Forecast (FY)0.26
Revenue Forecast (FY)£1.37B
Pennon Group plc Business Overview & Revenue Model
Company Description
Pennon Group Plc is a UK-based utility company focused on delivering vital clean water and wastewater management services. The firm supplies integrated water and wastewater solutions to residents in Cornwall, Devon, and particular sections of Dors...
How the Company Makes Money
Pennon primarily makes money through regulated water and wastewater services. The majority of revenue is earned by charging customers (households and non-households) for the supply of potable water and for sewerage/wastewater collection and treatm...
Pennon Group plc Earnings Call Summary
Earnings Call Date:Nov 27, 2025
(Q2-2026)
| % Change Since: |
Next Earnings Date:Dec 01, 2026
Earnings Call Sentiment Positive
The earnings call reflects a strong financial and operational performance with significant revenue growth and successful execution of strategic priorities. However, the company faces challenges with network failures and net ODI penalties in the water business. The overall sentiment leans towards optimism due to the positive financial results and operational successes.Positive Updates
Strong Financial Performance
The company reported a strong return to profitability, with operating profit more than doubling and profit before tax moving from a loss to GBP 65.9 million. Adjusted earnings per share increased to 14p from a prior year loss of 5.5p.
Negative Updates
Challenges with Increased Network Failures
Changing weather fronts have increased the number of network failures, although customer impacts have been mitigated on 70% of these.
Read all updates
Q2-2026 Updates
Positive
Negative
Strong Financial Performance
The company reported a strong return to profitability, with operating profit more than doubling and profit before tax moving from a loss to GBP 65.9 million. Adjusted earnings per share increased to 14p from a prior year loss of 5.5p.
Read all positive updates
Company Guidance
In the call, Pennon Group provided extensive guidance on its performance for fiscal year 2025-2026. The company reported a strong return to profitability, with both underlying and statutory operating profit more than doubling year-on-year, resulting in a profit before tax of GBP 65.9 million. The adjusted earnings per share increased to 14p, covering the interim dividend of 9.26p per share, which reflects a 4.1% increase in line with CPIH. The company's revenues increased by 25% to GBP 658 million, driven by higher tariffs and increased customer consumption, while costs in the Water Group rose by 6%. Despite inflationary pressures, Pennon maintained a strong balance sheet with gearing at 60% and raised GBP 500 million in new debt during the first half of the year. The company continues to focus on delivering its K8 commitments, with GBP 305 million of CapEx already invested in the first half. Pennon is on track to deliver a 7% return on regulated equity, supported by efficient financing and operational improvements. Additionally, the company is targeting net neutral for wastewater ODIs and has achieved a 50% reduction in pollution incidents year-to-date.Pennon Group plc Financial Statement Overview
Summary
Income Statement
62
Positive
Balance Sheet
38
Negative
Cash Flow
29
Negative
| Breakdown | Mar 2026 | Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.29B | 1.05B | 906.80M | 797.20M | 792.30M |
| Gross Profit | 921.60M | 995.90M | 856.00M | 506.70M | 532.30M |
| EBITDA | 514.40M | 302.80M | 319.90M | 261.00M | 368.60M |
| Net Income | 91.50M | -57.90M | -9.50M | 100.00K | 15.40M |
Balance Sheet | |||||
| Total Assets | 7.48B | 7.05B | 6.23B | 5.19B | 5.34B |
| Cash, Cash Equivalents and Short-Term Investments | 388.30M | 417.90M | 145.40M | 165.40M | 519.00M |
| Total Debt | 4.90B | 4.54B | 3.97B | 3.13B | 3.20B |
| Total Liabilities | 6.07B | 5.60B | 5.07B | 4.06B | 4.06B |
| Stockholders Equity | 1.41B | 1.45B | 1.16B | 1.12B | 1.27B |
Cash Flow | |||||
| Free Cash Flow | -253.30M | -575.10M | -450.00M | -173.70M | 25.90M |
| Operating Cash Flow | 376.10M | 93.50M | 148.90M | 157.50M | 254.90M |
| Investing Cash Flow | -632.80M | -676.40M | -658.00M | -330.50M | -639.60M |
| Financing Cash Flow | 168.90M | 866.80M | 510.80M | -180.60M | -2.02B |
Pennon Group plc Technical Analysis
Neutral
473.00
Price Trends
384.41
Negative
399.69
Negative
434.85
Negative
Market Momentum
-11.81
Negative
44.87
Neutral
84.76
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:PNN, the sentiment is Neutral. The current price of 473 is above the 20-day moving average (MA) of 340.40, above the 50-day MA of 384.41, and above the 200-day MA of 434.85, indicating a neutral trend. The MACD of -11.81 indicates Negative momentum. The RSI at 44.87 is Neutral, neither overbought nor oversold. The STOCH value of 84.76 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for GB:PNN.
Pennon Group plc Peers Comparison
UnderperformOutperform
Sector (66)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
66 Neutral | £686.58M | 8.92 | 32.38% | 5.55% | 5.60% | 5.05% | |
66 Neutral | $17.65B | 18.10 | 5.60% | 3.62% | 6.62% | 11.55% | |
65 Neutral | £11.40B | 17.84 | 27.72% | 3.50% | 21.96% | 121.69% | |
62 Neutral | £9.99B | 26.66 | 20.35% | 3.81% | 16.66% | 61.25% | |
59 Neutral | £2.72B | 53.87 | 1.10% | 5.90% | -7.78% | -91.96% | |
57 Neutral | £6.92B | 9.57 | 21.92% | 3.71% | 0.27% | ― | |
47 Neutral | £2.40B | 18.03 | 6.61% | 9.54% | 23.25% | ― |
* Utilities Sector Average
GB:PNN
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Pennon Group plc Corporate Events
Business Operations and StrategyDividendsPrivate Placements and Financing
Pennon Launches £550m Rights Issue to Fund Expanded Water Investment Plan
Negative
Oct 7, 2026
Pennon Group plc has unveiled a fully underwritten rights issue to raise about £550 million, offering 220,257,997 new shares at 250 pence on a 7-for-15 basis to existing investors. The discounted issue price aims to secure funding for an expa...
Business Operations and StrategyDividendsPrivate Placements and Financing
Pennon launches £550m rights issue and rebases dividend to fund AMP8 investment push
Negative
Oct 7, 2026
Pennon Group plc is a U.K.-based utility focused on regulated water and wastewater services, supplying customers and communities through its regional water businesses. Operating within the Ofwat regulatory framework, the group’s activities a...
Regulatory Filings and Compliance
Pennon Group Updates Share Capital and Voting Rights Totals
Neutral
Oct 1, 2026
Pennon Group plc has confirmed that, as of 30 September 2026, its issued share capital comprises 471,987,051 ordinary shares, of which 5,628 are held in treasury, leaving 471,981,423 shares carrying voting rights. The updated voting rights figure ...
Regulatory Filings and Compliance
Pennon CFO Adds Shares Under Incentive Plan
Positive
Sep 22, 2026
Pennon Group plc has disclosed a routine share transaction involving Group Chief Financial Officer Laura Flowerdew, in line with EU Market Abuse Regulation requirements. Flowerdew acquired 33 partnership shares and received 11 matching shares unde...
Business Operations and Strategy
Pennon Group Schedules October Strategic Update for Investors
Positive
Sep 16, 2026
Pennon Group plc has announced it will host a Strategic Update for investors and stakeholders on 7 October 2026, led by chief executive Keith Haslett and chief financial officer Laura Flowerdew. The session, scheduled for 9:00 a.m., will include a...
Regulatory Filings and Compliance
Pennon Group Updates Total Voting Rights and Share Capital
Neutral
Sep 1, 2026
Pennon Group plc has confirmed that, as of 31 August 2026, its issued share capital comprises 471,987,051 ordinary shares, with 5,628 held in treasury, resulting in 471,981,423 voting shares in circulation. This updated share and voting rights fig...
Business Operations and StrategyRegulatory Filings and Compliance
Pennon Adds Shares Under Employee Scheme on London Stock Exchange
Neutral
Sep 1, 2026
Pennon Group plc has admitted 2,183 new ordinary shares of 61.05 pence each to trading on the London Stock Exchange under its existing block listing for the Save As You Earn employee share scheme. Following this admission, the total number of ordi...
Executive/Board ChangesRegulatory Filings and Compliance
Pennon CEO Receives Share Grant Under Affinity Water Retention Award
Neutral
Aug 25, 2026
Pennon Group plc has disclosed a share transaction by Group Chief Executive Officer Keith Haslett, in line with EU Market Abuse Regulation requirements. The notification underscores the company’s adherence to regulatory standards on reportin...
Regulatory Filings and Compliance
Pennon CFO acquires shares under company incentive plan
Positive
Aug 21, 2026
Pennon Group has disclosed a share transaction involving its group chief financial officer, Laura Flowerdew, under EU Market Abuse Regulation requirements. Flowerdew acquired 33 partnership shares and received 11 matching shares in Pennon’s ...
Business Operations and StrategyRegulatory Filings and Compliance
Ofwat Backs £190m Extra Investment for Pennon Group in Draft Ruling
Positive
Aug 13, 2026
Ofwat has issued a draft determination approving £190 million of additional investment for Pennon Group for FY27/28 through to the end of AMP 8, in 2022/23 prices. The regulator’s decision broadly endorses Pennon’s core business c...
Executive/Board ChangesRegulatory Filings and Compliance
Pennon Group Awards Deferred Share Package to CFO Under 2026 Incentive Plan
Positive
Aug 5, 2026
Pennon Group plc has disclosed a share award to Group Chief Financial Officer Laura Flowerdew under its 2026 Annual Incentive Bonus Plan, in line with EU Market Abuse Regulation requirements. The award comprises 10,588 ordinary shares priced at 46...
Regulatory Filings and Compliance
Pennon Updates Total Voting Rights to Support FCA Disclosure Compliance
Neutral
Aug 3, 2026
Pennon Group plc has confirmed that, as of 31 July 2026, its issued share capital totals 471,985,900 ordinary shares, of which 5,628 are held in treasury, leaving 471,980,272 voting shares in circulation. The company noted that this voting rights ...
Executive/Board ChangesRegulatory Filings and Compliance
Pennon CFO Increases Stake Through Share Incentive Plan Award
Positive
Jul 21, 2026
Pennon Group plc has disclosed a transaction involving its Group Chief Financial Officer, Laura Flowerdew, under EU Market Abuse Regulation requirements. Flowerdew purchased 30 partnership shares and received 10 matching shares in Pennon’s o...
Regulatory Filings and Compliance
Pennon CFO Sells Shares to Cover Tax on Incentive Award
Neutral
Jul 21, 2026
Pennon Group plc has disclosed a share transaction by Group Chief Financial Officer Laura Flowerdew under EU Market Abuse Regulation rules. The filing concerns ordinary shares of 61.05 pence each in the company, which are listed on the London Stoc...
Delistings and Listing ChangesPrivate Placements and Financing
South West Water Finance Lists £350m Notes on London Stock Exchange
Positive
Jul 16, 2026
South West Water Finance Plc, a financing vehicle within Pennon Group’s water utility operations, has issued two new tranches of debt that have been admitted to trading on the London Stock Exchange’s Main Market and to the Financial Co...
Business Operations and StrategyPrivate Placements and Financing
Pennon’s South West Water Finance Issues £350m in New Green Bonds
Positive
Jul 15, 2026
Pennon Group’s financing arm, South West Water Finance Plc, has issued two new tranches of green bonds under its Euro Medium Term Note Programme, comprising £250 million of 6.000% fixed-rate notes due 2035 and £100 million of 3.806...
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.