Pennon Group

PNN.L

Regulated Water · Utilities

Exchange

London Stock Exchange

Winston Score

Winston is curious

Mixed quality — meaningful strengths and weaknesses.

Data as of Aug 23, 2026 · filings through Mar 31, 2026

How the score breaks down

Quality

Good

Growth

Good

Cash Flow

Good

Stability

Weak

Valuation

Strong

Dividends

Good

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Winston Score History

The full picture

Pennon Group is a UK water company that supplies clean drinking water and treats wastewater for homes and businesses in South West England and parts of the Midlands. Its main subsidiary, South West Water, serves around 1.7 million people across Devon, Cornwall, and Dorset. Pennon also owns Bristol Water, which it acquired in 2021 to expand its customer base.

The company earns revenue through regulated water and wastewater charges set by the UK industry regulator, Ofwat, which controls how much Pennon can charge customers and how much it must invest in infrastructure. This regulatory model provides stable, predictable income but limits how fast profits can grow. Pennon operates entirely within England and Wales, making it a purely domestic UK utility. Its main risk is regulatory pressure — Ofwat's next pricing review could restrict returns further, while the company also faces scrutiny over sewage spills and the significant capital spending required to upgrade aging water infrastructure.

Growth Profile

For growth stock investors

When traditional metrics don't capture the full picture, these are the signals growth stock investors use instead.

Revenue Growth

+143.8% YoY

YoY Growth Rate

Revenue accelerating

EPS Growth

+329.3% YoY

YoY Growth Rate

EPS growth accelerating

Insider Activity

0.3%ownership

→ Flat

Insider ownership roughly steady over the past year

Cash Runway

~9 months

£419M cash & investments

Quarterly Free Cash Flow

↓ Burn rate worsening

Short runway — potential dilution ahead through share issuance

Revenue accelerating

Pennon Group grew revenue 144% year-over-year and the growth rate is speeding up. That's the kind of momentum growth investors look for — the question is whether margins can follow.

The Winston Score above measures business quality today. Growth stocks often score lower because they invest in the future rather than maximising current profits. These metrics show what matters most for evaluating that future.

Score breakdown

Every number that matters to educated investors.

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Quality

Profit per sale

Gross Margin

73.8%

Premium pricing power — 73.8% gross margin

Profit after running costs

Operating Margin

25.6%

Excellent — 25.6% operating margin

Return on the money invested

ROCE

6.1%

Weak — 6.1% return on capital

ROIC between 5% and 15%. They earn 5 to 15 cents back per year on every dollar invested.

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Growth

Sales growth

Sales YoY

+64.1%

Fast-growing sales (+64.1% YoY)

Profit growth

EPS YoY

N/A

Data not available

How steady the profit is

EPS Consistency

5/8 quarters

Mixed — about half the quarters showed growth

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Cash Flow

Profit that turns into cash

Cash Conversion

411%

Turns 411% of profit into real cash

Spare cash per sale

FCF Margin

-19.6%

Burning cash (-19.6%)

Free cash flow is negative. They are burning cash, not generating it.

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Stability

What it owes vs what it owns

Debt / Equity

2.72

Heavy debt load (2.72)

Covers its interest

Interest Cover

1.50x

Dangerous — barely covers interest (1.5x)

Interest coverage between 1 and 3. Profits cover interest, but with little room to spare.

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Valuation

Price vs profit

P/E Ratio (TTM)

23.9x

no trend

Growth-priced — P/E 23.9

P/E above the market average. People are paying up for expected growth.

Cheaper or dearer next year

P/E vs Forward

+9.9

GROWING

Earnings expected to grow meaningfully — cheaper on forward P/E (23.9 → 13.9)

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Dividends

Dividend

Dividend Yield

8.42%

no trend

Healthy income — 8.42% yield

Yield above 6% — often a flag the market is pricing in a cut.

Dividend record

Dividend Growth

-27.0%

no trend

Dividend cut (-27.0% YoY) — warning sign

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