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| 08.08.25 05:20:18 |
Investors in SSE (LON:SSE) have seen respectable returns of 73% over the past five years |
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**Haftungsausschluss: Der Text wurde mit Hilfe einer KI zusammengefasst und übersetzt. Für Aussagen aus dem Originaltext wird keine Haftung übernommen!**
When you buy and hold a stock for the long term, you definitely want it to provide a positive return. But more than that, you probably want to see it rise more than the market average. But SSE plc (LON:SSE) has fallen short of that second goal, with a share price rise of 38% over five years, which is below the market return. Unfortunately the share price is down 2.3% in the last year.
Let's take a look at the underlying fundamentals over the longer term, and see if they've been consistent with shareholders returns.
This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
Over half a decade, SSE managed to grow its earnings per share at 22% a year. The EPS growth is more impressive than the yearly share price gain of 7% over the same period. So it seems the market isn't so enthusiastic about the stock these days.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).LSE:SSE Earnings Per Share Growth August 8th 2025
We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of SSE, it has a TSR of 73% for the last 5 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!
A Different Perspective
SSE provided a TSR of 1.3% over the last twelve months. But that was short of the market average. On the bright side, the longer term returns (running at about 12% a year, over half a decade) look better. It may well be that this is a business worth popping on the watching, given the continuing positive reception, over time, from the market. It's always interesting to track share price performance over the longer term. But to understand SSE better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with SSE , and understanding them should be part of your investment process.
Story Continues
If you like to buy stocks alongside management, then you might just love this freelist of companies. (Hint: many of them are unnoticed AND have attractive valuation).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on British exchanges.
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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| 28.03.25 09:11:17 |
Energy giant SSE names new chief executive from inside firm |
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**Haftungsausschluss: Der Text wurde mit Hilfe einer KI zusammengefasst und übersetzt. Für Aussagen aus dem Originaltext wird keine Haftung übernommen!**
SSE has appointed a new chief executive after current boss Alistair Phillips-Davies announced his retirement last year.
Martin Pibworth, who is currently the firm’s chief commercial officer, will take over the top job in July, with a nearly £1 million a year starting salary.
It comes after Mr Phillips-Davies oversaw SSE’s exit from the retail energy market in 2019, selling that part of its business to Ovo.
The outgoing chief was also made a Commander of the Order of the British Empire (CBE) for services to the energy industry last year.
Mr Pibworth takes the hotseat as SSE is partway through a £20.5 billion investment plan, which involves connecting an onshore wind farm in Shetland to the UK power grid and building a £4.3 billion sub-sea transmission cable between Peterhead in Scotland to a site in Yorkshire.
Both projects contribute to plans from the Government to ramp up massively clean energy generation on UK soil and in its waters to virtually cut out carbon emissions from the grid by 2030.
SSE is also working on the world’s largest offshore wind farm, the 3.6 gigawatt Dogger Bank scheme, and said it expects to complete the first part of that by the second half of 2025.
Chairman Sir John Manzoni said the new boss is a “proven industry leader, with deep sector experience and a highly strategic outlook”.
“Alistair has been an exceptional chief executive, leading the company’s transition into being the UK and Ireland’s clean energy champion, whilst delivering true and lasting value for all of our stakeholders.”
SSE said the new chief will get a base salary of £970,000 per annum, which will rise to £1.05 million from April next year, while bonuses and share-based incentive payments could see that rise significantly further.
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| 28.03.25 08:38:17 |
Are SSE plc's (LON:SSE) Fundamentals Good Enough to Warrant Buying Given The Stock's Recent Weakness? |
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**Haftungsausschluss: Der Text wurde mit Hilfe einer KI zusammengefasst und übersetzt. Für Aussagen aus dem Originaltext wird keine Haftung übernommen!**
It is hard to get excited after looking at SSE's (LON:SSE) recent performance, when its stock has declined 3.8% over the past three months. However, the company's fundamentals look pretty decent, and long-term financials are usually aligned with future market price movements. Specifically, we decided to study SSE's ROE in this article.
Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. In short, ROE shows the profit each dollar generates with respect to its shareholder investments.
How To Calculate Return On Equity?
Return on equity can be calculated by using the formula:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity
So, based on the above formula, the ROE for SSE is:
17% = UK£2.1b ÷ UK£12b (Based on the trailing twelve months to September 2024).
The 'return' is the amount earned after tax over the last twelve months. One way to conceptualize this is that for each £1 of shareholders' capital it has, the company made £0.17 in profit.
See our latest analysis for SSE
What Has ROE Got To Do With Earnings Growth?
Thus far, we have learned that ROE measures how efficiently a company is generating its profits. Based on how much of its profits the company chooses to reinvest or "retain", we are then able to evaluate a company's future ability to generate profits. Generally speaking, other things being equal, firms with a high return on equity and profit retention, have a higher growth rate than firms that don’t share these attributes.
SSE's Earnings Growth And 17% ROE
To start with, SSE's ROE looks acceptable. Especially when compared to the industry average of 10% the company's ROE looks pretty impressive. Despite this, SSE's five year net income growth was quite flat over the past five years. Based on this, we feel that there might be other reasons which haven't been discussed so far in this article that could be hampering the company's growth. For example, it could be that the company has a high payout ratio or the business has allocated capital poorly, for instance.
Next, on comparing with the industry net income growth, we found that the industry grew its earnings by 14% over the last few years.LSE:SSE Past Earnings Growth March 28th 2025
Earnings growth is a huge factor in stock valuation. It’s important for an investor to know whether the market has priced in the company's expected earnings growth (or decline). By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. Is SSE fairly valued? This infographic on the company's intrinsic value has everything you need to know.
Story Continues
Is SSE Efficiently Re-investing Its Profits?
Despite having a moderate three-year median payout ratio of 38% (meaning the company retains62% of profits) in the last three-year period, SSE's earnings growth was more or les flat. Therefore, there might be some other reasons to explain the lack in that respect. For example, the business could be in decline.
In addition, SSE has been paying dividends over a period of at least ten years suggesting that keeping up dividend payments is way more important to the management even if it comes at the cost of business growth. Based on the latest analysts' estimates, we found that the company's future payout ratio over the next three years is expected to hold steady at 39%. Therefore, the company's future ROE is also not expected to change by much with analysts predicting an ROE of 15%.
Conclusion
On the whole, we do feel that SSE has some positive attributes. However, given the high ROE and high profit retention, we would expect the company to be delivering strong earnings growth, but that isn't the case here. This suggests that there might be some external threat to the business, that's hampering its growth. Having said that, looking at current analyst estimates, we found that the company's earnings growth rate is expected to see a huge improvement. Are these analysts expectations based on the broad expectations for the industry, or on the company's fundamentals? Click here to be taken to our analyst's forecasts page for the company.
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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| 11.03.25 09:37:48 |
SSE (LON:SSE) Might Have The Makings Of A Multi-Bagger |
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**Haftungsausschluss: Der Text wurde mit Hilfe einer KI zusammengefasst und übersetzt. Für Aussagen aus dem Originaltext wird keine Haftung übernommen!**
Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. So when we looked at SSE (LON:SSE) and its trend of ROCE, we really liked what we saw.
Return On Capital Employed (ROCE): What Is It?
Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. Analysts use this formula to calculate it for SSE:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.13 = UK£3.0b ÷ (UK£29b - UK£5.1b) (Based on the trailing twelve months to September 2024).
Therefore, SSE has an ROCE of 13%. In absolute terms, that's a satisfactory return, but compared to the Electric Utilities industry average of 8.1% it's much better.
Check out our latest analysis for SSE LSE:SSE Return on Capital Employed March 11th 2025
In the above chart we have measured SSE's prior ROCE against its prior performance, but the future is arguably more important. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for SSE .
What The Trend Of ROCE Can Tell Us
Investors would be pleased with what's happening at SSE. The data shows that returns on capital have increased substantially over the last five years to 13%. The amount of capital employed has increased too, by 47%. This can indicate that there's plenty of opportunities to invest capital internally and at ever higher rates, a combination that's common among multi-baggers.
The Key Takeaway
A company that is growing its returns on capital and can consistently reinvest in itself is a highly sought after trait, and that's what SSE has. And with a respectable 51% awarded to those who held the stock over the last five years, you could argue that these developments are starting to get the attention they deserve. With that being said, we still think the promising fundamentals mean the company deserves some further due diligence.
On a final note, we've found 2 warning signs for SSE that we think you should be aware of.
While SSE may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this freelist here.
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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| 13.02.25 05:48:42 |
SSE's (LON:SSE) five-year total shareholder returns outpace the underlying earnings growth |
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**Haftungsausschluss: Der Text wurde mit Hilfe einer KI zusammengefasst und übersetzt. Für Aussagen aus dem Originaltext wird keine Haftung übernommen!**
For many, the main point of investing is to generate higher returns than the overall market. But every investor is virtually certain to have both over-performing and under-performing stocks. At this point some shareholders may be questioning their investment in SSE plc (LON:SSE), since the last five years saw the share price fall 11%. It's down 12% in about a quarter.
Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.
Check out our latest analysis for SSE
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
While the share price declined over five years, SSE actually managed to increase EPS by an average of 2.2% per year. Given the share price reaction, one might suspect that EPS is not a good guide to the business performance during the period (perhaps due to a one-off loss or gain). Or possibly, the market was previously very optimistic, so the stock has disappointed, despite improving EPS.
Given that EPS has increased, but the share price has fallen, it's fair to say that market sentiment around the stock has become more negative. Generally speaking, though, if the company can keep growing EPS then the share price will eventually follow.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).LSE:SSE Earnings Per Share Growth February 13th 2025
We know that SSE has improved its bottom line lately, but is it going to grow revenue? This freereport showing analyst revenue forecasts should help you figure out if the EPS growth can be sustained.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of SSE, it has a TSR of 13% for the last 5 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
SSE shareholders are down 1.2% for the year (even including dividends), but the market itself is up 18%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 3%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand SSE better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for SSE you should know about.
Story Continues
We will like SSE better if we see some big insider buys. While we wait, check out this freelist of undervalued stocks (mostly small caps) with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on British exchanges.
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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| 06.01.25 06:42:40 |
With 81% ownership, SSE plc (LON:SSE) boasts of strong institutional backing |
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**Haftungsausschluss: Der Text wurde mit Hilfe einer KI zusammengefasst und übersetzt. Für Aussagen aus dem Originaltext wird keine Haftung übernommen!**
Key Insights
Given the large stake in the stock by institutions, SSE's stock price might be vulnerable to their trading decisions The top 25 shareholders own 50% of the company Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock
If you want to know who really controls SSE plc (LON:SSE), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are institutions with 81% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
Because institutional owners have a huge pool of resources and liquidity, their investing decisions tend to carry a great deal of weight, especially with individual investors. Therefore, a good portion of institutional money invested in the company is usually a huge vote of confidence on its future.
Let's delve deeper into each type of owner of SSE, beginning with the chart below.
See our latest analysis for SSE LSE:SSE Ownership Breakdown January 6th 2025
What Does The Institutional Ownership Tell Us About SSE?
Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.
As you can see, institutional investors have a fair amount of stake in SSE. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see SSE's historic earnings and revenue below, but keep in mind there's always more to the story.LSE:SSE Earnings and Revenue Growth January 6th 2025
Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Hedge funds don't have many shares in SSE. The company's largest shareholder is JPMorgan Chase & Co, Brokerage and Securities Investments, with ownership of 5.0%. For context, the second largest shareholder holds about 4.9% of the shares outstanding, followed by an ownership of 4.3% by the third-largest shareholder.
Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.
Story Continues
Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of SSE
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.
Our information suggests that SSE plc insiders own under 1% of the company. As it is a large company, we'd only expect insiders to own a small percentage of it. But it's worth noting that they own UK£11m worth of shares. Arguably recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.
General Public Ownership
With a 18% ownership, the general public, mostly comprising of individual investors, have some degree of sway over SSE. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.
Next Steps:
I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 2 warning signs for SSE you should be aware of.
If you would prefer discover what analysts are predicting in terms of future growth, do not miss this freereport on analyst forecasts.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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| 11.12.24 09:26:25 |
Energy firm promises £22 billion investment in ‘critical grid infrastructure’ |
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**Haftungsausschluss: Der Text wurde mit Hilfe einer KI zusammengefasst und übersetzt. Für Aussagen aus dem Originaltext wird keine Haftung übernommen!**
Bosses at electricity firm SSEN Transmission have set out a £22 billion, five-year plan that they say will help the UK towards its clean energy targets as well as supporting tens of thousands of jobs.
The company, a subsidiary of energy giant SSE, is submitting plans to the energy regulator Ofgem in which it pledges to spend at least £22 billion on its business plan for the period April 2026 to March 2031.
That includes £16 billion for “strategic investments” already approved by Ofgem as part of work to improve the UK’s transmission network.
But SSEN Transmission says the potential for an additional £9.4 billion of investment could take overall spending over the five-year period to £31.7 billion.
The company insisted its plans could help the UK towards its net-zero targets, and also assist with the UK government’s clean energy target, which sets the goal of having at least 95% of electricity coming from low-carbon sources, such as renewable power, by 2030.
And if the additional spending goes ahead, it said investment of £31.7 billion would help support up to 37,000 jobs across the UK, including 17,500 in Scotland and 8,400 in the north of Scotland.
According to SSEN Transmission, its plans would contribute £15 billion to the UK economy, with £7 billion of this in Scotland, including £3 billion in the north of Scotland
Managing director Rob McDonald said the business plan “sets out an ambitious, deliverable blueprint, to unlock the unprecedented levels of investment required to deliver UK and Scottish net zero and energy security targets, including the clean power by 2030 mission”.
He added: “In what is one of the largest investment programmes of all time in Scotland, this plan will also support tens of thousands of jobs across the country, turbo-charging the economy and delivering a transformational and lasting legacy for communities, the economy and nature.”
Story Continues
However, the power firm stressed that the success of its plan would depend on having a “financial framework commensurate with the scale of the task and capable of attracting the unprecedented levels of investment needed to deliver the clean energy transition and protect future energy consumers”.
Alistair Phillips Davies, the chief executive of SSE plc, stressed the need to “deliver a cleaner, more secure and affordable electricity system for current and future generations”.
He stated: “With a new national mission to deliver clean power by 2030 in order to boost energy security and protect future consumers, unlocking the right level of investment during the next price control will be key.
“We’re setting out today the extent of our ambition and commitment; it is now crucial that Ofgem backs that ambition with an investable and financeable framework, setting an appropriate cost of equity that recognises the unprecedented levels of investment required to decarbonise the economy and deliver a clean power system.”
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| 07.12.24 09:02:40 |
A Look At The Fair Value Of SSE plc (LON:SSE) |
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**Haftungsausschluss: Der Text wurde mit Hilfe einer KI zusammengefasst und übersetzt. Für Aussagen aus dem Originaltext wird keine Haftung übernommen!**
Key Insights
The projected fair value for SSE is UK£18.32 based on Dividend Discount Model SSE's UK£17.00 share price indicates it is trading at similar levels as its fair value estimate Our fair value estimate is 16% lower than SSE's analyst price target of UK£21.75
In this article we are going to estimate the intrinsic value of SSE plc (LON:SSE) by taking the expected future cash flows and discounting them to today's value. One way to achieve this is by employing the Discounted Cash Flow (DCF) model. Before you think you won't be able to understand it, just read on! It's actually much less complex than you'd imagine.
Companies can be valued in a lot of ways, so we would point out that a DCF is not perfect for every situation. Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model.
See our latest analysis for SSE
Step By Step Through The Calculation
We have to calculate the value of SSE slightly differently to other stocks because it is a electric utilities company. In this approach dividends per share (DPS) are used, as free cash flow is difficult to estimate and often not reported by analysts. This often underestimates the value of a stock, but it can still be good as a comparison to competitors. We use the Gordon Growth Model, which assumes dividend will grow into perpetuity at a rate that can be sustained. For a number of reasons a very conservative growth rate is used that cannot exceed that of a company's Gross Domestic Product (GDP). In this case we used the 5-year average of the 10-year government bond yield (2.1%). The expected dividend per share is then discounted to today's value at a cost of equity of 6.0%. Compared to the current share price of UK£17.0, the company appears about fair value at a 7.2% discount to where the stock price trades currently. The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent.
Value Per Share = Expected Dividend Per Share / (Discount Rate - Perpetual Growth Rate)
= UK£0.7 / (6.0% – 2.1%)
= UK£18.3LSE:SSE Discounted Cash Flow December 7th 2024
Important Assumptions
Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at SSE as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 6.0%, which is based on a levered beta of 0.800. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.
Story Continues
SWOT Analysis for SSE
Strength
Earnings growth over the past year exceeded the industry.
Debt is well covered by earnings and cashflows.
Weakness
Dividend is low compared to the top 25% of dividend payers in the Electric Utilities market.
Opportunity
Annual earnings are forecast to grow for the next 3 years.
Good value based on P/E ratio and estimated fair value.
Threat
Dividends are not covered by cash flow.
Annual earnings are forecast to grow slower than the British market.
Looking Ahead:
Whilst important, the DCF calculation ideally won't be the sole piece of analysis you scrutinize for a company. It's not possible to obtain a foolproof valuation with a DCF model. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation. For SSE, we've put together three additional elements you should assess:
Risks: We feel that you should assess the 2 warning signs for SSE we've flagged before making an investment in the company. Management:Have insiders been ramping up their shares to take advantage of the market's sentiment for SSE's future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors. Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered!
PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the LSE every day. If you want to find the calculation for other stocks just search here.
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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| 29.11.24 11:05:08 |
SSE upgraded to Buy from Hold at Deutsche Bank |
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**Haftungsausschluss: Der Text wurde mit Hilfe einer KI zusammengefasst und übersetzt. Für Aussagen aus dem Originaltext wird keine Haftung übernommen!**
https://www.tipranks.com/news/company-announcements/eletrobras-and-copel-finalize-strategic-asset-swap-agreement
Deutsche Bank upgraded SSE (SSEZY) to Buy from Hold with an unchanged price target of 2,000 GBp. The recent selloff leaves the shares trading at the second lowest valuation in the entire sector, the analyst tells investors in a research note. The firm says the UK government wants to decarbonize the UK power sector by 2030, which will require substantial investment.
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Read More on SSEZY:
SSE price target lowered to 2,075 GBp from 2,100 GBp at RBC Capital SSE plc Reports Strong Interim Results and Strategic Progress Clean Energy ETFs Are Likely to Struggle Under Trump SSE downgraded to Sell from Neutral at Citi SSE price target raised to 2,100 GBp from 2,075 GBp at JPMorgan
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| 18.11.24 01:09:32 |
With 81% ownership of the shares, SSE plc (LON:SSE) is heavily dominated by institutional owners |
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**Haftungsausschluss: Der Text wurde mit Hilfe einer KI zusammengefasst und übersetzt. Für Aussagen aus dem Originaltext wird keine Haftung übernommen!**
Key Insights
Given the large stake in the stock by institutions, SSE's stock price might be vulnerable to their trading decisions A total of 24 investors have a majority stake in the company with 50% ownership Recent purchases by insiders
To get a sense of who is truly in control of SSE plc (LON:SSE), it is important to understand the ownership structure of the business.And the group that holds the biggest piece of the pie are institutions with 81% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
Since institutional have access to huge amounts of capital, their market moves tend to receive a lot of scrutiny by retail or individual investors.As a result, a sizeable amount of institutional money invested in a firm is generally viewed as a positive attribute.
Let's delve deeper into each type of owner of SSE, beginning with the chart below.
Check out our latest analysis for SSELSE:SSE Ownership Breakdown November 25th 2024
What Does The Institutional Ownership Tell Us About SSE?
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.
SSE already has institutions on the share registry. Indeed, they own a respectable stake in the company.This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong.It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of SSE, (below). Of course, keep in mind that there are other factors to consider, too.LSE:SSE Earnings and Revenue Growth November 25th 2024
Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences.SSE is not owned by hedge funds.Looking at our data, we can see that the largest shareholder is BlackRock, Inc. with 10% of shares outstanding.The Vanguard Group, Inc. is the second largest shareholder owning 4.9% of common stock, and Capital Research and Management Company holds about 3.6% of the company stock.
A closer look at our ownership figures suggests that the top 24 shareholders have a combined ownership of 50% implying that no single shareholder has a majority.
While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing.Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Story Continues
Insider Ownership Of SSE
The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least.The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.
I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.
Our information suggests that SSE plc insiders own under 1% of the company.As it is a large company, we'd only expect insiders to own a small percentage of it. But it's worth noting that they own UK£12m worth of shares.It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.
General Public Ownership
The general public-- including retail investors -- own 18% stake in the company, and hence can't easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand SSE better, we need to consider many other factors.To that end, you should be aware of the 2 warning signs we've spotted with SSE .
If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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