Download PDF

1. Company Snapshot

1.a. Company Description

United Utilities Group PLC provides water and wastewater services in the United Kingdom.It is also involved in the renewable energy generation, corporate trustee, financing, and property management activities; and provision of consulting, and project management services.The company operates 42,000 kilometers of water pipes; and 78,000 km of wastewater pipes.


United Utilities Group PLC was incorporated in 2008 and is based in Warrington, the United Kingdom.

Show Full description

1.b. Last Insights on UU

Have nothing to say about that one ...

1.c. Company Highlights

2. United Utilities' Fiscal '26 Interim Results: A Strong Start to AMP8

United Utilities reported a decent financial performance in the first half of Fiscal '26, with revenues growing in line with analysts' expectations. The company's EPS came in at 0.528, slightly below estimates of 0.537. The company's net debt to RCV gearing stood at 60%, within its target range of 55-65% and comfortably below the 68% Moody's Baa1 threshold. The company's cost of debt is in line with expectations, and it does not see huge scope for totex outperformance.

Publication Date: Nov -15

📋 Highlights
  • Regulatory Engagement & Reopeners: United Utilities is actively engaging with regulators on reopeners in AMP8 and AMP9, prioritizing a balance between fast and slow money to maintain financial ratios.
  • PFAS as New Investment Driver: The company identifies PFAS (per- and polyfluoroalkyl substances) as a significant investment driver but has not yet quantified its financial impact.
  • EPA Rating Impact: The company received a 2-star EPA rating, the second-highest in the sector, attributed to changes in pollution methodology, notably reclassifying category 4 to 3.
  • Financial Stability: United Utilities reports 60% net debt to RCV gearing, within its 55–65% target range and below the 68% Moody's Baa1 threshold, ensuring strong financial flexibility.
  • Data Center Demand Growth: With 35 data center applications received, the company sees infrastructure innovation opportunities, aligning with increased demand in this sector.

Revenue Growth Drivers

The company is seeing growth drivers emerging, including new legislation and data centers, and is engaging with regulators on reopeners in AMP8 and potential opportunities in AMP9. The company has seen a significant increase in demand for data centers, with 35 applications received, presenting an opportunity for the company to innovate and provide growth infrastructure. Analysts estimate next year's revenue growth at 19.9%, indicating a strong outlook for the company.

Operational Performance

The company has started well in AMP8, with a focus on driving transformation in totex delivery. The company has given guidance on ODIs in year 1 and expects to see benefits from infrastructure investments as the AMP period progresses. The company expects to deliver a leakage benefit this year alone that is bigger than what it delivered in the last AMP period. The company's performance is tracking well against the Ofwat index.

Valuation and Outlook

With a P/E Ratio of 30.66 and an EV/EBITDA of 15.64, the company's valuation appears to be reflecting its stable and predictable cash flows. The Dividend Yield stands at 4.37%, making it an attractive option for income investors. The company's ROE stands at 13.44%, indicating a decent return on equity. As the company continues to engage with regulators on reopeners and growth opportunities, investors will be watching for further updates on the company's progress.

Regulatory Environment

The company is working with regulators on an uncertainty mechanism for reopeners and expects conversations to continue. The company is also advocating for a national social tariff to provide universal support for affordability. The CMA will publish its final outcomes in March, and conversations are ongoing with DEFRA and the Cunliffe implementation team. The company's efforts to engage with regulators on key issues will be crucial in shaping its future growth prospects.

3. NewsRoom

Card image cap

How Recent Developments Are Rewriting the Story for United Utilities

Nov -27

Source:

Card image cap

Looking at the Narrative for United Utilities After Analyst Upgrades and Major Project Announcement

Nov -12

Source:

Card image cap

United Utilities Group PLC (LON:UU.) Shares Could Be 49% Below Their Intrinsic Value Estimate

Nov -07

Source:

Card image cap

FTSE 100 at new peak despite fading rate cut hope

Aug -20

Source:

Card image cap

Are Utilities Stocks Lagging Telefonica (TEF) This Year?

May -20

Source:

Card image cap

United Utilities Group (LON:UU.) Will Pay A Larger Dividend Than Last Year At £0.3457

May -18

Source:

Card image cap

United Utilities Group Full Year 2025 Earnings: EPS Misses Expectations

May -16

Source:

Card image cap

North West water supplier’s profit doubles as it hikes customer bills

May -15

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.65%)

6. Segments

Wholesale Wastewater Charges

Expected Growth: 7.5%

United Utilities Group PLC's Wholesale Wastewater Charges growth of 7.5% is driven by increasing water demand from industrial and commercial customers, coupled with regulatory pressures to improve wastewater infrastructure. Additionally, investments in water recycling and reuse technologies, as well as government incentives for sustainable practices, contribute to this growth.

Wholesale Water Charges

Expected Growth: 7.8%

The 7.8% growth in Wholesale Water Charges from United Utilities Group PLC is driven by increasing demand from industrial and commercial customers, coupled with regulatory price adjustments. Additionally, investments in water infrastructure and efficiency measures have led to higher revenue. Furthermore, the company's focus on water recycling and reuse has also contributed to the growth.

Household Retail Charges

Expected Growth: 8.2%

United Utilities Group PLC's 8.2% growth in Household Retail Charges is driven by increasing water demand, tariff hikes, and efficient cost management. Additionally, investments in infrastructure and technology have improved operational efficiency, allowing the company to pass on cost savings to customers, thereby driving revenue growth.

Other

Expected Growth: 7.2%

United Utilities Group PLC's 7.2% growth is driven by increasing water demand, efficient cost management, and strategic investments in infrastructure development. Additionally, the company's focus on customer service and regulatory compliance has led to improved operational efficiency, further contributing to its growth.

7. Detailed Products

Water Supply

United Utilities Group PLC provides clean and safe drinking water to households and businesses across the North West of England.

Wastewater Management

The company collects, treats, and disposes of wastewater and sewage from households and businesses, protecting the environment and public health.

Sludge Treatment

United Utilities treats and manages sludge, a by-product of wastewater treatment, to produce energy and fertilizer.

Water Recycling

The company treats and reuses water for non-potable purposes, such as irrigation and toilet flushing, reducing the demand on potable water supplies.

Water Efficiency Services

United Utilities provides water-saving solutions and advice to households and businesses, helping them reduce their water consumption and lower their bills.

Infrastructure Services

The company designs, builds, and maintains water and wastewater infrastructure, including pipes, pumps, and treatment plants.

8. United Utilities Group PLC's Porter Forces

Forces Ranking

Threat Of Substitutes

United Utilities Group PLC operates in a highly regulated industry, which limits the threat of substitutes. However, there is a growing trend towards decentralized energy generation, which could potentially substitute traditional utility services.

Bargaining Power Of Customers

United Utilities Group PLC serves a large customer base, which reduces the bargaining power of individual customers. Additionally, the company's services are essential to customers, making it difficult for them to switch to alternative providers.

Bargaining Power Of Suppliers

United Utilities Group PLC relies on a few large suppliers for its operations, which gives them some bargaining power. However, the company's scale and diversification of suppliers mitigate this risk to some extent.

Threat Of New Entrants

The water and energy industries are highly regulated, which creates significant barriers to entry for new entrants. Additionally, the high capital requirements and complexity of operations make it difficult for new companies to enter the market.

Intensity Of Rivalry

The water and energy industries are highly competitive, with several large players competing for market share. United Utilities Group PLC faces intense competition from other utility companies, which can lead to pricing pressures and reduced margins.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 82.87%
Debt Cost 5.05%
Equity Weight 17.13%
Equity Cost 5.96%
WACC 5.20%
Leverage 483.69%

11. Quality Control: United Utilities Group PLC passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
A2A

A-Score: 6.6/10

Value: 7.6

Growth: 6.4

Quality: 3.8

Yield: 7.5

Momentum: 5.0

Volatility: 9.0

1-Year Total Return ->

View Full Report
Stock-Card
Hera

A-Score: 6.5/10

Value: 6.8

Growth: 5.7

Quality: 3.9

Yield: 6.9

Momentum: 6.0

Volatility: 9.7

1-Year Total Return ->

View Full Report
Stock-Card
Centrica

A-Score: 5.9/10

Value: 6.5

Growth: 5.6

Quality: 3.5

Yield: 3.1

Momentum: 9.0

Volatility: 8.0

1-Year Total Return ->

View Full Report
Stock-Card
United Utilities

A-Score: 5.9/10

Value: 3.7

Growth: 4.7

Quality: 4.2

Yield: 7.5

Momentum: 6.5

Volatility: 9.0

1-Year Total Return ->

View Full Report
Stock-Card
Severn Trent

A-Score: 5.2/10

Value: 3.3

Growth: 3.7

Quality: 3.2

Yield: 6.9

Momentum: 5.0

Volatility: 9.0

1-Year Total Return ->

View Full Report
Stock-Card
Pennon

A-Score: 4.2/10

Value: 5.4

Growth: 2.2

Quality: 2.4

Yield: 9.4

Momentum: 1.0

Volatility: 5.0

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

12.08$

Current Price

12.08$

Potential

-0.00%

Expected Cash-Flows