Pennon Group Plc (PNN.L) stock analysis

In our weekly check, Pennon Group Plc is graded C (A to F). Of 25 checks on debt, profit, cash flow and trend: 14 pass, warnings: 4, red flags: 7.

About Pennon Group Plc

Pennon Group Plc is an Utilities company (Regulated Water) based in the United Kingdom, listed on LSE as PNN.L.

What our checks show for PNN.L

Red flags

• Net debt is 8.8x a year of EBITDA (debt/equity 3.48). That limits room in a downturn and raises refinancing risk.
• Free cash flow is negative (-19.6% of revenue): the business spends more cash than it brings in.
• The dividend takes 109% of profit: little cushion if profit falls.
• The stock has fallen as much as 82% from a peak. Would you have held through that?
• The share count grew by 78.8% in 2 years: each shareholder owns a smaller slice.
• Return on capital (ROCE) is only 4.6%.
• Pay in shares equals 0% of free cash flow: it dilutes shareholders.

Warning signs

• Operating profit covers interest only 2 times: a weak year could make the payments hard.
• The net margin is only 7.1%: little room if costs rise.
• The price swings a lot: 39.3% annual volatility. Expect large ups and downs.
• The stock is still below its previous peak.

Strengths

• The net margin rose by 5.1 points over 5 years, to 7.1%.
• The gross margin is 71.4% and has risen by 4.2 points: pricing power is holding.
• Operating cash flow is 4.11x net profit: the profit arrives as real cash.
• Analysts expect the net margin to improve by 4 points from today's 7.1%.
• Revenue grew 17.4% a year over the last 3 years.
• Earnings per share grew 680% a year over the last 3 years.

Next earnings report: 2026-12-01

Similar companies

MSEX · HTO · CWT · SVT.L

Questions

What grade does Pennon Group Plc (PNN.L) have?

In our weekly check, Pennon Group Plc is graded C (A to F). Of 25 checks on debt, profit, cash flow and trend: 14 pass, warnings: 4, red flags: 7. The grade is a risk check, not a buy or sell recommendation.

What are the main risks of PNN.L stock?

This week's biggest flags for Pennon Group Plc: High debt, Weak free cash flow, Dividend stretched. In total 11 of 25 checks show a warning or a red flag.

What does Pennon Group Plc do?

Pennon Group Plc is an Utilities company (Regulated Water) based in the United Kingdom, listed on LSE as PNN.L.

When does Pennon Group Plc report earnings next?

The next earnings report is expected on 2026-12-01. We re-run the checks every week, so the grade can change after it.

The grade is a risk check, not a price forecast, and not investment advice. In our 10-year test (S&P 500, 2016-2026), stocks we graded A or B fell more than 30% 2-3 times less often than D or F, without a lower average return.

Updated 2026-11-07

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