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SSE PLC SSE

Morningstar Rating
GBX 1,583.50 +19.50 (1.25%)
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Company Report

SSE: Confirms Fiscal 2024 EPS Guidance Despite Poor Weather Conditions, Shares Cheap

We confirm our GBX 2,200 fair value estimate after no-moat SSE released a trading statement for the third quarter of its 2024 fiscal year in which it confirmed its fiscal 2024 adjusted EPS guidance of more than GBX 150. It mentioned that the range of potential adjusted EPS is narrower than before due to lower-than-planned renewables output during the quarter. This suggests that the guidance was conservative in the first place. Fiscal 2024 P/E of 11 reflects the material undervaluation of the shares.

Price vs Fair Value

SSE is trading within a range we consider fairly valued.
Price
GBX 1,564.00
Fair Value
GBX 5,747.00
Uncertainty
Medium
1-Star Price
GBX 7,771.00
5-Star Price
GBX 4,818.00
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 1,564.00
Day Range
GBX 1,554.501,592.00
52-Week Range
GBX 1,485.001,932.50
Bid/Ask
GBX 1,583.00 / GBX 1,583.50
Market Cap
GBX 1.73 Tril
Volume/Avg
448,989 / 4.9 Mil

Key Statistics

Price/Earnings (Normalized)
9.90
Price/Sales
1.46
Dividend Yield (Trailing)
5.61%
Dividend Yield (Forward)
5.61%
Total Yield
6.26%

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
ORSTED
RWE
Price/Earnings (Normalized)
9.9046.883.02
Price/Book Value
2.112.980.70
Price/Sales
1.462.450.73
Price/Cash Flow
7.1914.87
Price/Earnings
SSE
ORSTED
RWE

Financial Strength

Metric
SSE
ORSTED
RWE
Quick Ratio
0.741.050.60
Current Ratio
0.911.421.44
Interest Coverage
2.78−3.832.14
Quick Ratio
SSE
ORSTED
RWE

Profitability

Metric
SSE
ORSTED
RWE
Return on Assets (Normalized)
6.38%−2.04%3.64%
Return on Equity (Normalized)
21.19%−8.73%20.57%
Return on Invested Capital (Normalized)
9.72%−2.27%7.54%
Return on Assets
SSE
ORSTED
RWE
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Utilities - Diversified Industry Comparables

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Name
Morningstar Rating for Stocks
Economic Moat
Market Cap
IBDSF
Iberdrola SAJlc$71.6 Bil
IBDRY
Iberdrola SA ADRXvdj$71.6 Bil
ESOCF
Enel SpAQll$64.6 Bil
ENLAY
Enel SpA ADRJwkrq$64.6 Bil
SRE
SempraYhgxm$44.6 Bil
ENGIY
Engie SA ADRPvw$38.4 Bil
ENGQF
Engie SAMml$38.4 Bil
EONGY
E.ON SE ADRZshw$33.2 Bil
ENAKF
E.ON SERpx$33.2 Bil
AES
The AES CorpLbtw$11.0 Bil

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