Severn Trent PLC
🇬🇧 SVT.LSE · London · GB00B1FH8J72
Utilities
GBX 2970.00 price at analysis
Scores
Key Metrics
Powered by EODHDP/E (TTM)
24.1
P/E (Price-to-Earnings)Shows how much investors pay for each $1 of profit. We display the TTM P/E (Trailing Twelve Months) which uses actual earnings from the last 4 quarters. This is more reliable than Forward P/E which uses analyst estimates.
Calculation: 2970.00 ÷ 123.05 = 24.1
TTM period through: 2026-03-31
Forward P/E (estimated): 14.4
Based on analyst estimates
Reference: Provider P/E (Trailing): 24.1
Yield (Fwd)
4.24%
Dividend YieldThe Forward yield (Fwd) shows the next announced annual dividend / current price — what you'd earn going forward. The Trailing yield (TTM) in the tooltip shows dividends actually paid in the last 12 months. Forward is shown as primary because it reflects the company's current commitment to shareholders.
Trailing Yield (TTM): 4.02%
Div. Growth (5Y CAGR)
4.4%
Growth Streak
8 yrs
Consecutive years of increase
Net Debt/EBITDA (TTM)
7.5x
Latest quarter: 15.7x
Net Debt / EBITDAA leverage ratio showing how many years of EBITDA (earnings before interest, taxes, depreciation, and amortization) it would take to repay net debt. EBITDA approximates operating cash generation. Lower ratios (e.g., <3x) are generally safer; higher (e.g., >5x) may indicate more financial risk.
TTM through: 2026-03-31
Latest quarter (2026-03-31): 15.7x
The quarterly value can spike when quarterly EBITDA is very low (e.g., one-time charges).
Quick guide: <2x manageable, >4x can be risky (sector-dependent).
Payout (Fwd)
102.4%
Payout RatioDividends as a percentage of earnings. The Forward payout (Fwd) uses the announced dividend divided by actual past earnings (TTM) — it tells you if the company can afford what it promised. Very high payouts can be risky, especially if profits fall.
Announced dividend / actual earnings (TTM)
Payout (TTM): 100.0%
Cash Flow Payout (TTM): 40.1%
FCF Coverage (TTM): -2.62x
ROE
20.5%
ROE (Return on Equity)A profitability measure: how much profit is generated from shareholders’ equity. Higher isn’t always better if it comes from high debt.
EV/EBITDA
13.3x
EV/EBITDAA valuation ratio that compares total business value (including debt) to EBITDA. Lower can mean cheaper, but context matters.
Summary
Severn Trent is a high-quality regional water monopoly offering highly predictable regulated revenues and a flawless 10-year dividend growth history. Trading at 2,970 GBX, the stock sits substantially below our P/FFO fair value estimate of 3,824-5,737 GBX, representing significant upside while offering a secure 4.0% yield. Worth considering for new positions as recent earnings upgrades and the dismissal of major class-action litigation highlight operational resilience against sector-wide regulatory pressures.
Sector Context
Severn Trent operates as a regulated regional water and wastewater monopoly in the UK, providing essential services to millions of customers. In the utilities sector, massive physical infrastructure assets mean heavy depreciation and significant capital expenditures, making P/FFO a more accurate measure of true earnings power than standard P/E, while high structural debt is standard and supported by stable, inflation-linked regulated revenues.
Temporary Opportunity Identified
Sector-wide regulatory scrutiny, massive capital expenditure requirements, and public backlash regarding sewage spills have temporarily depressed valuations across UK water utilities, masking Severn Trent's underlying operational outperformance.
📊 Strategy Analysis
- • Trading at an exceptionally attractive P/FFO of 9.3x, well below the fair value range of 3,824-5,737 GBX, highlighting a deep discount for this monopoly asset.
- • Flawless dividend track record with 10 consecutive years of growth and no cuts, currently offering a secure 4.0% yield.
- • Recent operational outperformance, including an upgrade to 2028 earnings guidance and a 17% revenue increase, demonstrates resilience despite sector headwinds.
- • Legal overhang reduced significantly following the Court of Appeal's dismissal of a major £330 million competition class-action lawsuit.
⚠ What to Watch
- • Heavy environmental and regulatory capital expenditure requirements (AMP8 super-cycle) drive significant negative free cash flow, necessitating continuous reliance on debt markets.
- • High structural leverage with Net Debt/EBITDA at 7.5x and Debt/Equity at 5.97x leaves the company sensitive to sustained high interest rates.
- • Long-term regulatory uncertainty stemming from the new Water Act 2025 and potential restructuring of the UK water regulator (Ofwat) creates ongoing compliance risks.
📊 Historical Trends (10 Years)
Powered by EODHDThese charts show how key metrics have evolved over the past decade, helping you identify if the company is improving or deteriorating.
Debt Evolution (Net Debt / EBITDA)
Lower values are better. A declining trend indicates the company is reducing its debt (deleveraging).
Revenue & Earnings Growth
Consistent growth in revenueRevenue
The money a company brings in from selling its products or services. It’s the top line before costs. (blue) and earningsEarnings (Profit)
What’s left after expenses. Positive earnings mean the business made a profit; negative means a loss. (green) indicates a healthy business. Look for upward trends and recoveries after temporary dips.
Dividend Sustainability (FCF vs Dividends Paid)
Free cash flowFree Cash Flow
Cash left after the company pays for running the business and maintaining it. Often used to fund dividends, pay debt, or buy back shares. (FCFFCF (Free Cash Flow)
Short for Free Cash Flow: cash left after operating needs and maintenance spending., blue) should cover dividends paidDividends Paid
Cash the company paid out to shareholders. It’s not guaranteed and can change over time. (green). If dividends consistently exceed FCFFCF (Free Cash Flow)
Short for Free Cash Flow: cash left after operating needs and maintenance spending., the dividend may be at risk.
Analysis date: 2026-05-30
Disclaimer: This information is for educational purposes only. Not financial advice.