olivLaw · European equity research
Pennon Group plc PNN.L
United Kingdom · London Stock Exchange · ISIN GB00BNNTLN49 · Vertical: Listed companies from United Kingdom
Pennon Group manages the full water cycle, from raw water and treatment through to wastewater treatment and biosolids recycling, across its South West and SES regions. The company enters AMP8, its largest capital programme, with priorities on environment, resilience and affordability. The 2025/26 year brought bill rises and higher demand for customer support, while 291 storm overflow schemes are underway.
At the close of 05 Nov 2026, Pennon Group plc (PNN.L) stock was 3.48 GBP (−0.17% on the day), with market capitalisation 1.6 bn GBP, P/E 18.0 on diluted EPS of 0.19 GBP over the last 12 months, dividend yield 558.01%, beta 0.59, 52-week range 3.21–6.00 GBP.
Data as of · AI analysis dated · Source: ESEF annual reports and closing prices, computed by olivLaw.
Price history
Loading chart…
Technical reading
- RSI (14)
- 42.7
- weak (30–45)
- Bollinger (20, 2)
- 3.15 – 3.56
- in the upper half of the band · %B 0.81 · band width 12.0%
- SMA 50 / 200
- 4.01 / 4.88
- downtrend (price < SMA50 < SMA200)
- MACD (12, 26, 9)
- -0.14 / -0.20
- MACD above signal
Indicators describe past prices; on their own they do not predict direction. On our history the RSI ≤ 40 filter added no return (see the signals methodology).
Performance
| Company | EURO STOXX 50 | vs EURO STOXX 50 | Vertical median | |
|---|---|---|---|---|
| 1 month | −14.8% | −0.6% | −14.2 pp | — |
| 3 months | −25.0% | −4.2% | −20.9 pp | — |
| 6 months | −33.8% | +4.3% | −38.1 pp | — |
| Year to date | −34.0% | +7.5% | −41.5 pp | — |
| 1 year | −32.6% | +9.9% | −42.6 pp | +5.8% |
| 3 years | −53.0% | +49.8% | −102.9 pp | +26.3% |
| 5 years | −70.7% | +42.8% | −113.5 pp | — |
Price returns, dividends excluded.
Quarterly results
ESEF annual reports carry no quarters: the results are annual (below).
E/P over time
E/P = trailing-12-month diluted EPS / price at quarter end. E/P is the inverse of P/E and stays defined when earnings are negative.
Today's P/E sits at the 0 percentile of its own 1-quarter history (min 27.4, median 27.4, max 27.4; quarters with earnings only).
Fiscal years
| Fiscal year | 2023 | 2024 | 2025 | 2026 |
|---|---|---|---|---|
| Revenue | unavailable | 907.8 m | 1.0 bn | 1.3 bn |
| Revenue YoY | unavailable | unavailable | +15.4% | +23.2% |
| Net income | unavailable | -9.5 m | -57.9 m | 91.5 m |
| Net income YoY | unavailable | unavailable | unavailable | unavailable |
| Diluted EPS | unavailable | -0.03 | -0.16 | 0.19 |
| Diluted EPS YoY | unavailable | unavailable | unavailable | unavailable |
| net % | unavailable | -1.0% | -5.5% | 7.1% |
| Free cash flow | unavailable | -406.2 m | -569.6 m | -270.7 m |
Balance sheet & financial health
Fiscal year 2026 · 31 Mar 2026
- Cash
- 332.7 m GBP
- Financial debt
- 4.9 bn GBP
- Net debt
- 4.6 bn GBP
- Equity
- 1.4 bn GBP
- Total assets
- unavailable GBP
- Debt / equity
- 3.47x
- Current ratio
- 1.51x
- ROE
- 6.4%
- ROA
- unavailable
- FCF margin
- -21.0%
Financial statements (source on every figure)
Revenue and net income (GBP)
Margins
Income statement · GBP
| Line | 2023 | 2024 | 2025 | 2026 | Source (latest year) |
|---|---|---|---|---|---|
| Revenue | — | 907.8 m | 1.0 bn | 1.3 bn | esef· 25 Jun 2026verified |
| Operating income | — | 140.4 m | 110.9 m | 304.8 m | esef· 25 Jun 2026verified |
| Depreciation & amortisation | — | 172.0 m | 187.1 m | 193.7 m | esef· 25 Jun 2026verified |
| EBITDA | — | 312.4 m ≈ | 298.0 m ≈ | 498.5 m ≈ | esef· 25 Jun 2026derived |
| Interest expense | — | 162.8 m | 199.4 m | 213.3 m | esef· 25 Jun 2026verified |
| Pre-tax income | — | -9.1 m | -72.7 m | 114.4 m | esef· 25 Jun 2026verified |
| Income tax | — | -600.0 k | -15.9 m | 21.8 m | esef· 25 Jun 2026verified |
| Net income | — | -9.5 m | -57.9 m | 91.5 m | esef· 25 Jun 2026verified |
| Diluted EPS | — | -0.03 | -0.16 | 0.19 | esef· 25 Jun 2026verified |
| Dividend per share | 0.25 | 0.25 | 25.07 | 19.43 | esef· 25 Jun 2026verified |
≈ computed by olivLaw from the reported lines of the same year: Operating income + Depreciation & amortisation.
Balance sheet · GBP
| Line | 2023 | 2024 | 2025 | 2026 | Source (latest year) |
|---|---|---|---|---|---|
| Cash | 132.3 m | 134.0 m | 417.9 m | 332.7 m | esef· 25 Jun 2026verified |
| Receivables | — | 355.4 m | 391.8 m | 452.4 m | esef· 25 Jun 2026verified |
| Inventories | — | 13.2 m | 12.8 m | 15.3 m | esef· 25 Jun 2026verified |
| Current assets | — | 569.4 m | 900.6 m | 877.0 m | esef· 25 Jun 2026verified |
| Property, plant & equipment, net | — | 5.4 bn | 5.8 bn | 6.3 bn | esef· 25 Jun 2026verified |
| Goodwill | — | 179.9 m | 179.9 m | 179.9 m | esef· 25 Jun 2026verified |
| Intangibles (excl. goodwill) | — | 60.3 m | 62.2 m | 67.5 m | esef· 25 Jun 2026verified |
| Accounts payable | — | 346.5 m | 331.0 m | 422.3 m | esef· 25 Jun 2026verified |
| Short-term debt | — | 240.7 m | 257.4 m | 151.2 m | esef· 25 Jun 2026verified |
| Long-term debt | — | 3.8 bn | 4.3 bn | 4.7 bn | esef· 25 Jun 2026verified |
| Current liabilities | — | 592.7 m | 596.0 m | 580.2 m | esef· 25 Jun 2026verified |
| Equity | 1.1 bn | 1.2 bn | 1.5 bn | 1.4 bn | esef· 25 Jun 2026verified |
| Shares outstanding at year end | — | 327.6 m | 359.6 m | 471.6 m | esef· 25 Jun 2026derived |
Cash flow · GBP
| Line | 2023 | 2024 | 2025 | 2026 | Source (latest year) |
|---|---|---|---|---|---|
| Operating cash flow | — | 148.9 m | 93.5 m | 358.7 m | esef· 25 Jun 2026verified |
| Capex | — | 555.1 m | 663.1 m | 629.4 m | esef· 25 Jun 2026verified |
| Free cash flow | — | -406.2 m ≈ | -569.6 m ≈ | -270.7 m ≈ | esef· 25 Jun 2026derived |
| Investing cash flow | — | -658.0 m | -676.4 m | -612.8 m | esef· 25 Jun 2026verified |
| Financing cash flow | — | 510.8 m | 866.8 m | 168.9 m | esef· 25 Jun 2026verified |
| Dividends paid | — | 111.7 m | 126.9 m | 133.7 m | esef· 25 Jun 2026verified |
≈ computed by olivLaw from the reported lines of the same year: Operating cash flow − Capex.
Computed indicators
Growth
Profitability
Returns
Balance sheet
Liquidity
Cash
Efficiency
Market and valuation
1 indicators that do not apply to the sector.
Valuation
olivLaw classification
Score: 24 / 100
A scoring methodology on indicators and valuation, not investment advice.
score < 40
Closing price
05 Nov 2026Source: olivLaw, closing series
Market cap: 1.6 bn GBP
Key indicators
Coverage and freshness
Score by group
- Quality21
- Returns100
- Balance sheet12
- Valuation18
Estimated value range
unavailable — no valuation assumptions for the reporting currency
Valuation assumptions are editorial choices, not measured; beta is not measured.
Valuation methods
Assumptions (illustrative, editorial)
- Risk-free rate
- 6.5%
- Equity risk premium
- 6.0%
- Beta (default)
- 1.00
- Cost of equity
- 12.5%
- Terminal growth
- 3.0%
Factor scorecard
Unattractive profile · Score 24/100
| Factor | Value | Score | Weight used |
|---|---|---|---|
| ROIC · Quality | 4.3% | 21 (vs peers) | 13% |
| Net margin · Quality | 7.1% | 43 (vs peers) | 8% |
| FCF conversion · Quality | -295.8% | 0 (on a fixed band) | 8% |
| Revenue CAGR 3Y · Growth | unavailable | unavailable | — |
| EPS CAGR 3Y · Growth | unavailable | unavailable | — |
| Net debt / EBITDA · Balance sheet | 9.2x | 0 (on a fixed band) | 13% |
| Interest coverage · Balance sheet | 1.4x | 0 (on a fixed band) | 8% |
| Current ratio · Balance sheet | 1.5x | 59 (on a fixed band) | 5% |
| P/E (TTM) · Valuation | 18.0x | 28 (vs peers) | 13% |
| EV/EBITDA · Valuation | 12.5x | 23 (on a fixed band) | 13% |
| FCF yield · Valuation | -16.5% | 0 (on a fixed band) | 11% |
| Shareholder yield (distributions) · Returns | 8.1% | 100 (on a fixed band) | 8% |
| Payout ratio (FCF) · Returns | unavailable | unavailable | — |
Factors without a value were dropped; the remaining weights were renormalised.
Score groups
- Balance sheet12/100 · 3/3 factors with a value
- Growth· partialunavailable · 0/2 factors with a value
- Quality21/100 · 3/3 factors with a value
- Returns· partial100/100 · 1/2 factors with a value
- Valuation18/100 · 3/3 factors with a value
A «partial» group is computed from under half of its weight or from one factor: it is not a full assessment of the group.
Memo
PENNON GROUP PLC (PNN.L). Latest full fiscal year: 2026; data up to 2026-03-31.
Figures computed from the financial statements: revenue 1.3 bn GBP in 2026; YoY growth 23.2%; net margin 7.1%; ROE 6.4%; net debt/EBITDA 9.2x.
The estimated value range is 96.39–119.40 GBP per share (median of 2 methods, agreement: low); assumptions are illustrative. Against the central value of 106.72 GBP, the price of 3.48 GBP leaves a potential of 2,965.0% (value / price − 1) and a margin of safety of 96.7% (1 − price / value). The range is the median of the methods' low, central and high values, not a probability interval.
olivLaw score 24/100, methodological classification: unattractive profile (score, margin of safety and method agreement together; not a judgement of the right price). Groups assessed only in part: growth, returns. Not investment advice.
Text generated deterministically from the figures shown; no language model. Not investment advice.
What supports the thesis
- Shareholder yield (distributions): 8.1%
- The price is below the estimated value range
What contradicts it
- ROIC: 4.3%
- FCF conversion: -295.8%
- Net debt / EBITDA: 9.2x
- Interest coverage: 1.4x
- P/E (TTM): 18.0x
- EV/EBITDA: 12.5x
- FCF yield: -16.5%
- The valuation methods diverge
Not assessed (insufficient data or a ratio without meaning): Revenue CAGR 3Y, EPS CAGR 3Y, Payout ratio (FCF).
Versus the vertical median
Listed companies from United Kingdom · same country · compared with 39 companies
Multiples and returns vs the median
Price rebased to 100 (monthly, 5 years)
Companies in the vertical
| Market cap | P/E | ROE | Net margin | Revenue YoY | 1A / 3A | |
|---|---|---|---|---|---|---|
| BATS.LBritish American Tobacco P.L.C. | 104.3 bn | 13.5 | 16.5% | 30.3% | −1.0% | +7% / +88% |
| ABF.LAssociated British Foods PLC | 14.7 bn | 14.3 | 9.2% | 5.3% | −3.1% | −5% / −15% |
| 0EV1.LCarnival PLC | 5.5 bn | 4.1 | 46.7% | 13.4% | +6.4% | unavailable / unavailable |
| BAB.LBabcock International Group PLC | 5.1 bn | 24.7 | 34.7% | 4.1% | +7.2% | −10% / +158% |
| AUTO.LAutotrader Group PLC | 4.8 bn | 16.4 | 60.2% | 47.1% | +3.9% | −13% / −23% |
| BBY.LBalfour Beatty PLC | 4.2 bn | 16.3 | 23.2% | 2.8% | +15.2% | +20% / +160% |
| ABDN.LAberdeen Group PLC | 4.1 bn | 10.8 | 8.0% | 28.9% | −2.1% | +11% / +41% |
| BKG.LThe Berkeley Group Holdings PLC | 3.6 bn | 11.3 | 8.8% | 13.4% | −4.2% | −0% / −22% |
| BME.LB&M European Value Retail PLC | 2.9 bn | 17.4 | 21.2% | 2.8% | +3.7% | +68% / −51% |
| AJB.LAj Bell PLC | 2.4 bn | 22.8 | 49.9% | 33.1% | +18.0% | +8% / +128% |
| PNN.LPennon Group PLC | 1.6 bn | 18.0 | 6.4% | 7.1% | +23.2% | −37% / −51% |
| ASHM.LAshmore Group PLC | 1.4 bn | 13.9 | 13.1% | 71.6% | −0.1% | +28% / +18% |
| BCG.LBaltic Classifieds Group PLC | 1.2 bn | 23.2 | 15.8% | 57.6% | +6.9% | −99% / −99% |
| APN.LApplied Nutrition PLC | 763.6 m | 36.2 | 41.2% | 19.7% | +24.2% | +71% / unavailable |
| BAG.LA.G. Barr P.L.C. | 671.9 m | 14.4 | 14.4% | 10.8% | +4.0% | −7% / +26% |
| ASC.LAsos PLC | 494.5 m | — | -81.3% | -12.0% | −14.7% | +71% / +8% |
| ALFA.LAlfa Financial Software Holdings PLC | 486.8 m | 16.3 | 61.5% | 23.8% | +15.3% | −28% / +10% |
| AML.LAston Martin Lagonda Global Holdings PLC | 344.3 m | — | -93.4% | -39.2% | −20.6% | −45% / −85% |
| APTD.LAptitude Software Group PLC | 111.3 m | 28.5 | 7.2% | 6.2% | −7.3% | −30% / −23% |
| AMGO.LAmigo Holdings PLC | 9.9 m | — | — | — | −81.9% | +325% / +844% |
| ASBE.LAssociated British Engineering PLC | 605.3 k | — | -19.1% | — | unavailable | unavailable / unavailable |
| AMIF.LAmicorp Fs (uk) PLC | 221.6 k | 0.1 | 27.5% | 9.1% | +8.1% | unavailable / unavailable |
| AAF.LAirtel Africa PLC | — | — | 24.1% | 10.6% | +29.5% | −7% / +164% |
| AAL.LAnglo American PLC | — | — | -19.3% | -20.2% | +4.5% | +30% / +76% |
| ACG.LAcg Metals Limited | — | — | -80.3% | -32.0% | +134.8% | +60% / +63% |
1- and 3-year price returns: for PNN.L from daily closes (the same as the performance table), for the other companies from month-end closes.
olivLaw engine forecast
The world engine ran after the company's latest material disclosure. Probabilities are of TOUCHING a level within the horizon (not closing there) and sit next to the random walk (p_rw), the no-information benchmark.
The engine has no published run for this company yet.
Valuation scenarios (editable assumptions)
Illustrative scenarios
Illustrative: not forecasts and without probabilities. Each case is one coherent set of assumptions, computed on today's figures.
Estimated price (GBP)
| Estimated price | Bear | Base | Bull |
|---|---|---|---|
| 1 years | 2.29 Total return -29% · Per year -29% | 4.03 Total return 22% · Per year 22% | 6.04 Total return 81% · Per year 81% |
| 3 years | 2.71 Total return -6% · Per year -2% | 5.32 Total return 75% · Per year 21% | 8.69 Total return 178% · Per year 41% |
| 5 years | 3.22 Total return 21% · Per year 4% | 7.04 Total return 145% · Per year 20% | 12.52 Total return 317% · Per year 33% |
- Exit P/E± 1.33
- Net margin± 0.93
- Annual revenue growth± 0.69
- Annual dilution± 0.08
AI analysis
AI-generatedAI-generated analysis (Claude) from cited public sources; it may contain errors. Not investment advice. As of 27 Oct 2026 · Model: claude-haiku-5-5.
In brief
Pennon Group manages the full water cycle, from raw water and treatment through to wastewater treatment and biosolids recycling, across its South West and SES regions. The company enters AMP8, its largest capital programme, with priorities on environment, resilience and affordability. The 2025/26 year brought bill rises and higher demand for customer support, while 291 storm overflow schemes are underway.
SWOT
Strengths
Weaknesses
- Public trust in the water sector is low and media pressure remains high, affecting the company's reputation 1.
- Customer contact volumes rose after bill increases, indicating that service quality still needs improvement 1.
- Reliance on external capital and credit ratings makes funding sensitive to market conditions 1.
Opportunities
Threats
- Policy and regulatory change, including reforms after the Cunliffe Review, could create unfunded investment obligations 1.
- Geopolitical risks and supply chain pressures could raise treatment and construction costs 1.
- Climate change and population growth could strain resources and assets if investment is not completed on time 1.
Risks
- Policy and regulatory changehigh
Sector reforms, including recommendations from the Cunliffe Review, could alter the regulatory regime and create unfunded investment obligations 1.
- Funding and credit ratingshigh
Access to funding and compliance with debt covenants are essential for the AMP8 programme. Tougher market conditions could limit funding capacity 1.
- Compliance and water qualitymedium
New requirements on micro-pollutants and persistent chemicals may require major changes to treatment processes and add cost 1.
- Customer bill affordabilitymedium
Tariff increases can affect vulnerable customers and may lead to higher support requests or regulatory pressure 1.
- Delivery of the investment programmemedium
Delivering a record investment programme depends on delivery partners and controlled costs. Delays could affect environmental outcomes 1.
Investment thesis
What would need to be true (bull case)
- If the AMP8 programme is delivered on time, the regulated asset base could grow significantly, supported by environmental and water investment 1.
- Reported progress on pollution reduction and storm overflows may strengthen confidence among regulators and investors 1.
- The regulated market and steady demand for drinking water offer predictable revenues over long periods 1.
What would break the thesis
- If sector reforms impose unfunded investment, margins could be pressed in the coming years 1.
- Bill increases have raised customer dissatisfaction and media pressure, which could affect the company's reputation 1.
- Tougher funding conditions could raise the cost of capital and limit investment capacity 1.
What to watch
- Progress of the storm overflow programme and WINEP schemes2026/27
- Outcome of sector reform following the Cunliffe Review and Correy review2027
- Launch of the end-to-end customer services platform2026/27
- Completion of the two remaining Pennon Power projects2026/27
Products, market & competition
AI-generatedAI-generated analysis (Claude) from cited public sources; it may contain errors. Not investment advice. As of 27 Oct 2026 · Model: claude-haiku-5-5.
The business
Pennon Group plc, through its regulated subsidiaries, provides drinking water and wastewater services, managing the whole water cycle from raw water collection and treatment to distribution, collection and treatment. Activities are integrated across regions, and the company frames its strategic priorities around water quality, storm overflows, affordability and Net Zero gains 1.
Renewable energy through Pennon Power supports operational resilience and reduces exposure to energy price volatility. Two projects have been energised and two more are due in 2026/27 1.
The company describes its plans to 2030 as the most ambitious in its history. Investment is financed roughly two-thirds by investors and one-third by customers, and the organisation has been reshaped around the four strategic priorities 1.
Segments
Regulated water and wastewater
The core segment covers drinking water, sewerage and wastewater treatment in the company's regions under regulation. AMP8 plans include upgrading one-third of water treatment works and reducing network leakage below 10% 1.
Pennon Power (renewable energy)
Pennon Power generates renewable and low-carbon energy to reduce carbon and improve energy resilience across the group. Projects include energised assets and behind-the-meter schemes in the South West 1.
Retail and customer services
Customer services for household and non-household customers, billing and call centres form a dedicated area. The company is investing in new platforms, with an end-to-end customer services system anticipated in 2026/27 1.
Market context
The main market is the regulated water and wastewater sector in the United Kingdom, operating under price controls set for regulatory periods. The company notes that the regulatory and policy environment is changing, including reforms arising from the Cunliffe Review 1.
Demand for infrastructure investment is rising, and the company observes pressure on delivery partners and supply chain costs. This context could affect the efficiency of investment and access to funding 1.
Trends
- Water sector reformheadwind
Reforms proposed by the Government, including the Cunliffe Review, could change the approach, regulation and institutional arrangements of the sector. The uncertainty may raise regulatory risk 1.
- Environmental investment and Net Zerotailwind
Storm overflow programmes, pollution reduction and nature-based solutions are clear priorities, supported by the need to improve water quality. These could expand the regulated asset base 1.
- Cost and financial pressuresheadwind
Geopolitical tensions and rising supply chain, chemical and interest costs could pressure near-term financial performance. Access to funding and maintaining credit ratings become essential 1.
- Bill affordability and customer supportmixed
The 2025/26 bill rises increased social pressure and requests for support. The company is expanding support for vulnerable customers, which may limit short-term financial benefits 1.
Competitive position
Water services in the United Kingdom operate as regional monopolies, so there is no direct competition for household customers in served areas. Competition arises mainly for funding, labour, contractors and capital within the regulatory framework 1.
Competitive pressure also comes from comparisons between regional operators on performance and investment efficiency, which the regulator tracks. The primary sources do not name US-listed competitors 1.
- Wessex Water
Partner in the Strategic Resource Options project, cited as a reference in the company's report rather than a direct competitor in the same service areas 1.
- Other regional UK water operators
Operators that compete indirectly for funding, contractors and efficiency within the common regulatory framework, not named explicitly as competitors in the source 1.
- Infrastructure contractors
Firms competing for delivery resources and supply chains, a pressure the company highlights in its annual report 1.
- Renewable energy developers
Other solar and biogas developers compete for assets and contracts, the context in which Pennon Power builds its portfolio 1.
News & filings
In the press
- South West Water’s failure to fix leaks ‘putting customer supplies at risk’The Guardian World · 05 Nov 2026 · EN
- South West Water owner taps investors to fix infrastructure after sewage spillsThe Guardian World · 07 Oct 2026 · EN
- South West Water fined £8m for hundreds of sewage spills in Cornwall and DevonThe Guardian World · 29 Sept 2026 · EN
- South West Water has worst environmental record in England, analysis showsThe Guardian World · 30 Aug 2026 · EN
- Pennon faces balance sheet pressure ahead of September strategy updateYahoo Finance — News · 25 Aug 2026 · EN
- South West Water fined £1.85m over parasite outbreak in DevonThe Guardian World · 02 Jun 2026 · RO
Annual reports (ESEF)
- Annual report 202625 Jun 2026
- Annual report 202501 Jul 2025
Sources
- [1] Annual report, fiscal year ended 2026-03-31 (ESEF) · SEC / Pennon Group plc · 31 Mar 2026
Figures computed by olivLaw from ESEF annual reports and closing prices; the qualitative analysis is AI-generated from cited sources. Not investment advice.