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What Do Investors Need To Know About United Utilities Group PLC’s (LON:UU.) Earnings Trend?

Declan Brown
Updated

United Utilities Group PLC’s (LON:UU.) latest earnings announcement in March 2018 indicated that the company endured a substantial headwind with earnings deteriorating by -18.28%. Today I want to provide a brief commentary on how market analysts view United Utilities Group’s earnings growth trajectory over the next few years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in. View out our latest analysis for United Utilities Group

Analysts’ outlook for next year seems rather subdued, with earnings climbing by a single digit 4.71%. The growth outlook in the following year seems much more positive with rates reaching double digit 13.01% compared to today’s earnings and declines to UK£300.28m by 2021.

LSE:UU. Future Profit June 22nd 18
LSE:UU. Future Profit June 22nd 18

While it is useful to understand the growth rate year by year relative to today’s value, it may be more insightful to evaluate the rate at which the earnings are rising or falling on average every year. The pro of this technique is that it ignores near term flucuations and accounts for the overarching direction of United Utilities Group’s earnings trajectory over time, fluctuate up and down. To compute this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is -0.13%. This means that, we can assume United Utilities Group will chip away at a rate of -0.13% every year for the next few years.

Next Steps:

For United Utilities Group, I’ve put together three fundamental aspects you should look at:

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  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.

  2. Valuation: What is UU. worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether UU. is currently mispriced by the market.

  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of UU.? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!


To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.