Financial Trading Blog
Stock of the day 20/03/2015 – Pennon Group PLC
Overall, Pennon’s 2014 was strong, with a big surge in the final quarter taking it from £6.25 at the start of the year to £9.18 by the year’s close. This translated to a 2015 open of £9.23, with the stock hitting an intraday high of £9.24 on January 5th. Since then, however, Pennon has been shedding these gains, reaching a low of £7.94 on March 11th; a mild recovery has pushed it back up to £8.36 following investor-pleasing news this Friday.
It was announced today that Sir John Parker is becoming Pennon’s chairman, succeeding current Ken Harvey who is to leave at the end of July. This appointment led the stock to spike to £8.42 before falling back to the current price quoted above. Parker is currently the chairman of Anglo-American, and is a safe pair of hands previously chairing 5 FTSE 100 companies, including National Grid, Babcock International. Given his experience, it is unsurprising that investors responded well to the announcement.
Pennon also looks good from a dividends perspective; forecasts suggest a 5.1% per share increase each year for the next two years, another positive from an already notably stable stock. On top of this came some impressive half-year figures back in November 2014, with a 10% increase in revenue to £1.3 billion with a 9.1% growth in pre-tax profits to £207.3 million. It was this announcement that provided the catalyst for the big gains Pennon saw at the end of 2014.
However, despite the positive news surrounding the company, given the lack of pre-statement information analysts have given the stock an average rating of ‘hold’, with a consensus target price of £8.62.
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