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SSE PLC SSE

Morningstar Rating
GBX 1,745.92 −23.58 (1.33%)
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Company Report

National Grid Earnings: Highly Dilutive Rights Issue to Fund Investments Step-Up

We maintain our GBX 1,040 fair value estimate after National Grid released fiscal 2024 results that were in line with company-compiled consensus and a new 5-year strategic plan calling for a massive step-up in investments to be funded by a GBP 7 billion rights issue and noncore asset disposals. The firm will pay a GBX 58.5 dividend in fiscal 2024, 5.6% above last year. It extends its target to grow the dividend in line with inflation through fiscal 2029 with the caveat that the 2024 dividend will be rebased to take into account the rights issue's shares. All in all, we forecast a 2025 dividend of GBX 43.

Price vs Fair Value

SSE is trading at a 100% premium.
Price
GBX 1,769.50
Fair Value
GBX 3,475.00
Uncertainty
Medium
1-Star Price
GBX 9,545.00
5-Star Price
GBX 7,916.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

SSE's exposure to regulated networks and renewables provide a hedge against rising interest rates. While higher interests could dampen renewables projects' value, they could drive higher allowed networks' returns in future regulatory periods.

Bears

The dividend rebase does not solve the investment funding problem given the different investment profiles of networks and renewables assets.

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News

Trading Information

Previous Close Price
GBX 1,769.50
Day Range
GBX 1,739.001,767.50
52-Week Range
GBX 1,485.001,932.50
Bid/Ask
GBX 1,732.50 / GBX 1,747.00
Market Cap
GBX 1.90 Tril
Volume/Avg
2.8 Mil / 3.7 Mil

Key Statistics

Price/Earnings (Normalized)
11.16
Price/Sales
1.85
Dividend Yield (Trailing)
4.96%
Dividend Yield (Forward)
4.96%
Total Yield
4.89%

Company Profile

SSE is an energy holding company based in the United Kingdom. The bulk of SSE's profit comes from the company's 10.8 GW of power generation and its electricity transmission and distribution networks . The firm is also involved in smaller related businesses such as gas storage and energy services.
Sector
Utilities
Industry
Utilities - Diversified
Stock Style Box
Large Core
Total Number of Employees
10,754

Competitors

Valuation

Metric
SSE
IBE
RWE
Price/Earnings (Normalized)
11.1613.2023.73
Price/Book Value
2.101.450.80
Price/Sales
1.851.701.02
Price/Cash Flow
6.797.7412.52
Price/Earnings
SSE
IBE
RWE

Financial Strength

Metric
SSE
IBE
RWE
Quick Ratio
0.740.600.56
Current Ratio
0.910.771.56
Interest Coverage
2.784.983.75
Quick Ratio
SSE
IBE
RWE

Profitability

Metric
SSE
IBE
RWE
Return on Assets (Normalized)
6.38%4.79%1.36%
Return on Equity (Normalized)
21.19%14.40%4.64%
Return on Invested Capital (Normalized)
9.72%7.51%2.60%
Return on Assets
SSE
IBE
RWE
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Utilities - Diversified Industry Comparables

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Economic Moat
Market Cap
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IBDRY
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ESOCF
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ENLAY
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SRE
SempraXsgdgrdHdbyg$48.0 Bil
ENGQF
Engie SAJtcd$41.3 Bil
ENGIY
Engie SA ADRRgm$40.7 Bil
EONGY
E.ON SE ADRNpwykgkzdCtw$36.0 Bil
ENAKF
E.ON SENxw$34.9 Bil
AES
The AES CorpXvzgfbwxyYvsnp$14.9 Bil

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