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Pennon Group Plc (PNN) Fair Value & Analysis

Utilities · GB · Market cap 2.3B GBX · ISIN GB00BNNTLN49

What is Pennon Group Plc really worth?

PG Pennon Group Plc PNN · LSE
Price£4.64
Fair Value£2.31
Upside−50.2%
Quality28/100

Below-average quality, and trading another 101% above our fair value of £2.31.

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Risks

!Expensive Growth (revenue 5y +15.7 %/yr)
!Thin margins · 7.1% net margin
!High debt · negative free cash flow
!Trails peers (4/14)
!Moderate moat 48/100
!Evidence only medium, so the estimate is less certain
!Weak on past: 26 out of 100

For context

·8.18% dividend yield
Evidence: Medium Range £2.10 – £3.46

Fair value as of: Aug 19, 2026

From 16 valuation models · updated 16 days ago

Share price +1.4% over the past month.

What runs behind every stock

26 valuation models 8 families, DCF to NCAV 37 quality factors margins, balance sheet, cashflow, debt 6 AI factors moat, what no ratio measures 2,000+ data points verified, per stock, median

69 individual criteria per stock, every one traceable See the method →

What matters now

  • The price sits above even our optimistic bull case (£3.46). The favourable scenario is already priced in.
  • Weak quality (28/100) and above fair value at the same time, the margin of safety is missing on both counts.

Price vs Fair Value (5 years)

£13.49 £3.87 Fair Value £2.31 Jun 2021 Sep 2026

White line = price, green steps = our fair value per fiscal year, dashed = 300-day average. As of Aug 19, 2026.

How to read this chart

60‑month range £3.87 – £13.49 · fair‑value band £2.10 – £3.46 · the £4.64 price screens above the £2.31 fair value. Green steps = our fair value per fiscal year (point-in-time, no hindsight). Dashed = 300-day average. As of Aug 19, 2026.

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Analysis

Pennon Group Plc (PNN) currently trades at £4.64, while our model-based Fair Value estimate is £2.31, implying the stock looks roughly 100.6% overvalued today. The Quality Score stands at 28/100 (below-average quality), in the Utilities sector. Bull case: the Dividend Discount group reads highest at a median of £4.09 per share, and 1 of the 13 models we run sit above the £4.64 price. Bear case: the Earnings-Based group reads lowest at £1.33, and 12 of the 13 models stay below the price. Evidence for this calculation is medium.

Over the trailing twelve months, Pennon Group Plc generated revenue of £1.2B at a net margin of 2.5%. Revenue grew 24.8% year over year. It earns a return on equity of 2.6%. Net debt stands at £4.5B. Fundamentals as of Aug 19, 2026

Our scenario range runs from £2.10 (bear case) to £3.46 (bull case); at £4.64, the current price sits above that range. Bear and bull are the same models run on conservative and optimistic assumptions (margins, growth, valuation multiples), so a plausible valuation range, not a price target. For context, the median of 10 Utilities peers we cover trades at 12% fair-value upside, at −50%, PNN screens richer than that median.

Fair Value models

Each model estimates fair value its own way; the Fair Value above is the evidence-weighted, family-balanced blend. Evidence (0–100) measures how completely this model’s inputs are available: well-fed models carry more weight in the blend. The spread across models is intentional, each one stresses a different value driver; dividend models, for instance, come out structurally low when payout is small. Every input is real reported data, nothing guessed.

Model Bear ⓘBear = the cautious scenario: the same model computed with conservative anchors (lower growth, margins and valuation multiples). Together with Bull it frames a plausible valuation range, not a price target.BaseBull ⓘBull = the optimistic scenario: the same model computed with favourable anchors (higher growth, margins and valuation multiples). Together with Bear it frames a plausible valuation range, not a price target. Evidence
Highest evidence
Residual Income best evidence £2.38 £2.48 £2.56 76
EPV — — £0.2500 68
ROIC Compounder — — £0.2500 68
All 16 models by family
Earnings-Based
Graham-Dodd £1.32 £4.22 £5.62 64
Lynch FV £0.9300 £1.33 £1.73 61
PEG = 1.0 £0.9300 £1.33 £1.73 57
EPV — — £0.2500 68
Dividend Discount
Gordon GGM £2.49 £4.96 £7.51 67
DDM Multi-Stage £2.49 £4.09 £5.24 67
Multiples
P/E Multiple £2.62 £3.49 £4.36 63
P/S Multiple £2.47 £3.30 £4.12 58
P/B Multiple £2.47 £3.30 £4.12 55
EV/EBIT £0.7000 £3.25 £5.80 59
EV/EBITDA £1.23 £3.96 £6.68 61
EV/Revenue — — £1.95 50
Asset-Based
NCAV (Graham) £1.49 £2.00 £2.98 54
Economic Profit
Residual Income best evidence £2.38 £2.48 £2.56 76
ROIC Compounder — — £0.2500 68
Growth Earnings
Growth-Adj P/E £2.23 £3.18 £4.13 67

Widest divergence: Dividend Discount (£4.09) versus Earnings-Based (£1.33). Highest evidence: Residual Income (76).

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Key figures & financial health

P/E ratio 92.8
P/S ratio 6.57 P/E × margin
EPS (TTM) £0.0500 price ÷ EPS = P/E 92.8
Dividend yield 8.2%
Net margin 7.1% FY2026
Return on equity 2.6% TTM
More key figures
Profitability
Return on assets (EBIT) 2.9% avg 5y
Operating margin 24.3% TTM
Growth
Revenue (TTM) £1.2B TTM
Revenue growth (YoY) +24.8% 3y avg +17.4%
EPS growth (YoY) −92.8%
Balance sheet & cash flow
Free cash flow −253M GBX FY2026
Net debt 4.5B GBX FY2026

Figures from reported company fundamentals · as of Aug 19, 2026. TTM = trailing twelve months.

Quality Score breakdown

Overall quality 28/100

Of which business quality 29 · Market factors (momentum, volatility) 45

Profitability 24
Margins and returns on capital today
Quality Growth 65
Are margins and returns improving?
Cashflow 49
Earnings quality: real cash, not paper profit
Fin. Strength 9
Balance sheet, leverage, solvency risk
Investment 32
Disciplined investing over empire-building
Low Volatility 86
Calm price path (market factor)
Momentum 30
Price trend over the last 3–12 months (market factor)
52W Momentum 26
Distance to the 52-week high (market factor)
Net Issuance 0
Buybacks instead of dilution

Non-valuation factor families (profitability, growth, cashflow, financial strength, momentum …), each academically grounded. Valuation itself sits in the Fair Value and is deliberately excluded here to avoid double-counting.

All values are scores from 0 to 100 (100 = best against fixed, research-based bands), not percentages. The three market factors (momentum, 52-week proximity, low volatility) are displayed but carry zero weight in the headline number: market sentiment is not a business property.

About the company

Pennon Group Plc provides water and wastewater services in the United Kingdom. The company operates through two segments, Water and Non-Household Retail. Pennon Group Plc was incorporated in 1989 and is based in Exeter, the United Kingdom.

Company description, as reported by the company or data provider.

Revenue & earnings trend

FY2022 – FY2026 · reported fiscal years

Pennon Group Plc reported revenue of £1.3B in FY2026 versus £792M in FY2022, a compound +13.0%/yr. Reported net income was £91.5M in FY2026, compounding +56.1%/yr from FY2022.

Growth Quality 52/100
The company is growing, but growth may require heavy reinvestment or weak cash conversion.
Latest Revenue (FY 2026)
£1.3B
Latest YoY
+23.2%
Avg. revenue growth/yr (3Y) ⓘMeasures the company's TOTAL revenue from reported annual statements: compound average growth per year (CAGR) from the fiscal year 3, 5 or N years back to the most recent comparable fiscal year. Not per share: buybacks do not change this number, and a merger can appear as a growth jump.
+17.4%
Avg. revenue growth/yr (5Y) ⓘMeasures the company's TOTAL revenue from reported annual statements: compound average growth per year (CAGR) from the fiscal year 3, 5 or N years back to the most recent comparable fiscal year. Not per share: buybacks do not change this number, and a merger can appear as a growth jump.
+15.7%
Avg. revenue growth/yr (40Y) ⓘMeasures the company's TOTAL revenue from reported annual statements: compound average growth per year (CAGR) from the fiscal year 3, 5 or N years back to the most recent comparable fiscal year. Not per share: buybacks do not change this number, and a merger can appear as a growth jump.
+7.1%
Value creation/yr (5Y) ⓘEarnings growth per share (CAGR 5 years) plus dividend yield: value created per share and year.
+1.0% (−7.2 + 8.2)
Revenue +13.0%/yr
FY22 £792M
FY23 £797M
FY24 £907M
FY25 £1.0B
FY26 £1.3B
Net income +56.1%/yr
FY22 £15.4M
FY23 £100K
FY24 −£9.5M
FY25 −£57.9M
FY26 £91.5M

PNN screens 101% overvalued. Compare with American Water Works Company →

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Pennon Group Plc · Fair Value
£2.31 −101%Fair Value
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Cite: Fair Value Calculator (2026). "Pennon Group Plc Fair Value". https://www.fairvalue-calculator.com/stock/PNN

Peer Group

Utilities - Regulated Water · 64 stocks

How this stock ranks against its industry: the green marker is this stock, the band is the typical 25–75% peer range, and the tick is the median.

Quality Score 28 · Bottom 25%
Fair Value upside −50% · Below median
Return on equity (TTM) 6% · Below median
Return on assets 3% · Above median
Net margin (TTM) 7% · Below median
Operating margin (TTM) 25% · Above median
Revenue growth 22% · Top 25%
Dividend yield (TTM) 8.2% · Top 25%
Debt / equity 2.60× · Higher than 75% of peers

Valuation Multiples vs Utilities - Regulated Water median · lower = cheaper

P/E (TTM) 92.8× · Pricier than 75% of peers
P/B 2.24× · Pricier than median
P/S (TTM) 2.45× · Pricier than median
EV/EBITDA 12.7× · Pricier than median
PEG 8.20× · Pricier than 75% of peers

Strength profile in five axes (Snowflake)

Five quick dimensions, each 0 to 100: VALUE (fair-value potential), FUTURE (revenue growth), PAST (return on equity), HEALTH (low debt), DIVIDEND (yield). Green = this stock, grey = typical sector peer.

VALUEFUTUREPASTHEALTHDIVIDEND
This stock
VALUEFUTUREPASTHEALTHDIVIDEND
Sector peers
VALUE0 · sector 0
FUTURE100 · sector 28
PAST26 · sector 31
HEALTH0 · sector 65
DIVIDEND100 · sector 52

VALUE 0: the price sits above our fair-value range.

Insider activity: 35/100

Values & ESG

Does this company touch areas you may want to avoid? The classification is inferred from sector and industry.

None of the checked exposures detected

Similar stocks

10 more Utilities - Regulated Water stocks, each showing price versus our Fair Value estimate (as of Aug 19, 2026).

Stock Price Fair Value vs Fair Value
American Water Works Company AWK $138.30 $65.80 −52%
SBS SBS $4.82 $8.13 +69%
Essential Utilities, Inc WTRG $41.10 $21.81 −47%
Guangdong Investment Limited 0270 HK$8.15 HK$12.82 +57%
Grandblue Environment Co 600323 ¥29.61 ¥33.29 +12%
American States Water Company AWR $89.88 $47.94 −47%
Chengdu Xingrong Environment Co 000598 ¥7.35 ¥9.09 +24%
California Water Service Group CWT $50.48 $33.56 −34%
Chongqing Water Group 601158 ¥4.14 ¥2.77 −33%
Beijing Enterprises Water Group 0371 HK$1.74 HK$3.00 +73%

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Frequently asked questions

Is Pennon Group Plc (PNN) overvalued or undervalued?
As of Aug 19, 2026, our model estimates a fair value of £2.31 versus a price of £4.64, about −50% upside (overvalued).
What is the fair value of PNN?
Our model-based fair value for Pennon Group Plc is £2.31 (as of Aug 19, 2026), built from audited fundamentals. The current price: £4.64.
What is the quality score of PNN?
Pennon Group Plc has a Quality Score of 28/100. It measures business quality (profitability, growth, cash flow, balance-sheet strength, investment discipline, share issuance). Market factors such as price momentum and volatility do not enter the number; they are shown separately in the detail view.
What is the revenue of Pennon Group Plc (PNN)?
Pennon Group Plc reported trailing-twelve-month revenue of about £1.2B (latest available figure, as of Aug 19, 2026).
What is the net profit margin of PNN?
The net profit margin of Pennon Group Plc is about 2.5%, meaning it keeps roughly 2.5% of revenue as net income. Based on the latest reported figures.
Does Pennon Group Plc pay a dividend?
Pennon Group Plc currently shows a dividend yield of about 8.18% relative to its recent price (as of Aug 19, 2026).
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