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The appointment of Lizz is good news for SSE as she is against a windfall tax. Clarity on her energy policy seems to indicate she will give energy producers loans to subsidize the price of gas & electricity so up until the point SSE aggrees to opt into the voluntary scheme of long term fixed price on renewable energy it will realise huge profits.
The only danger I can see now is the risk of a Labour government & if that happens god help us!
Fair enough Deadly4U, agree that Cap Gains should not be included in Earnings for P/E Calc. Truss's treatment of Energy bills boosting the sp today....onwards and upwards !!
Spark
Buy lol
Hi Clued, SSE sold it's stake in Scotia Gas last year which bumped up earnings, SSE's core earnings are still expected to grow this year, but if you adjust the earnings without the SG sale then current P/E would be around 18. That's why using P/E without adjusting the earnings for exceptional items is somewhat misleading :)
Sparky300, I still hold and much short-term depends upon effects of Truss's action on elec charges.....
Had a good few months with this share , up and down, but really can’t see where tomorrow’s opening price will settle. Sorely tempted to jump back in and purchase especially with the current positive broker recommendations calling over£19? Any thoughts?
Hi Deadly4U, I simply used the LSE data as follows to get the PE Ratio:
Shares in Issue 1,068m
Market Cap. £17,975m
Market Size 1,500
PE Ratio 5.860
Earnings 287.30
Dividend 82.10
Yield 4.877%
So a Forecast PE of 15 seems unreasonably high, why such a big drop from 5.86 ?
Schjmh
Drax is down because
Karsi Kwarteng said we must stop burning trees immediately !!
Went down well
forward P/E is at 15, so pretty reasonable
investors who are selling are concerned about;
1) Inflation,
2) Recession,
3)Windfall tax,
4) Bad debts ( customers not paying bills, and ridiculous costs to terminate supply, including Court battles)
I'm sure there are more.
With a Current PE Ratio < 6 really gotta wonder who is selling here !!
Well said Deadly4U. The drop today looks likely caused by the EU stating that the current Energy Pricing Model has to be changed soon. Gas price capping mentioned as is using Oil to produce Electricity, etc.. Wind Energy pricing presumably will lose the premium of energy unit pricing using gas !!
Same with Drax, could it be the windfall tax issue raising its head again and who it could affect?
Clued, I completely agree! People before profits, however, in SSE's case I would class them as a fair and decent business. In general the excess profits they are making are not of their own making. I would condemn businesses such as Vitol and Trafigura, which are private Swiss commodity trading companies who are making $Billions just by buying and selling gas and oil futures, fuelling the fire of supply and demand in forward energy markets. That greed and avarice needs to be stamped. For SSE to announce a 20% donation of profits to poor families would be a nice gesture, but in reality would only go into the pockets of greedy corporate trading companies who know exactly how to game the system.
I am deeply saddened by the state of the UK's energy prices and am certain people will die this winter. Alas there is nothing we can do, as the saying goes, Hard times make strong Men, Strong Men make good times, Good times make weak Men, Weak Men make Hard times :)
I can’t find any mention of anything either. Hopefully just market sentiment/wobble.
I’ve been wondering this. Been searching online nothing? Anyone
Only thing I can see is the scrip dividend. Investors choosing shares instead of cash.
Big drop today? How come , any opinion? GLA
Deadly4U, generally agree. I meant Centrica Gas profits by the way, which is BG, so you're right there !! There are some businesses out there that apply human morality and fairness because at end of day humans are behind the decisions, and the ultimate test of morality and fairness are those who do the right thing morally when legally they don't have to (including societal pressure), but big business at the top attracts the sociopaths who lack empathy described as 'hard nosed'. I'd be willing to take a 20% div cut to help genuine energy poverty, I wonder if other shareholders would concur so maybe SSE BoD should put it to a vote. Forgive my naivity if so, but we'll all die someday and ......!!
Clued, British Gas announced 10% of profits, not centrica, so they only pay like $10 M, if CNA it would have been laudable. On SSE selling Electricity for below market price, not going to happen, Gov needs to reform the CFD system and instead guarantee minimum profit margins, and not minimum prices. Business doesn't care about fairness, only profits
Deadly4U, the UK Govt brought in the current price capping system, which is a maximum price so Energy Cos can charge well below it if they wish. I understand Greed, etc .., but why don't they simply charge a price which gives them v good profits and which is seen as moral v current high gas and oil input prices, accept that SSE is Wind Energy ? Centrica announced yesterday that they'll donate 10%+ of their profits back to help reduce their customers energy costs. I'm a LT SSE investor but believe in fairness.
Great summary of current concerns for SSE Guitarsolo! I sold out for similar reasons a few months back, I can't see how SSE can avoid the current toxic political conversation around energy generation and profits. I really think it is an excellent business with very smart management, but the current energy market where they sell their wind energy for large profits above expectations, even if in practice that doesnt rly happen, will lead to continued talks of "super" profits and calls to reform the energy market, affecting SSE's business and affecting profits and business confidence.
I've sold my minor holding here at 1831p today. I've pocketed a nice profit of about 75% over 2.5 years (incl dividends) having bought in at 1208p. I've long had the feeling that I am better at judging when to buy utilities than sell them, but there are a few current/future issues for SSE that make me think I might be better to pocket my profit and step away:
(i) With the energy price crisis there will be persistent calls for windfall taxes.
(ii) Following on from the above, the threat of nationalisation will linger. It will never happen, but even a whiff can dent the share price.
(iii) Ofgem is going to come under enormous pressure to make future pricing favourable to customers.
(iv) Rising interest rates will make financing the massive investments required more expensive (I haven't done any research or calculations about this, just a general feeling).
(v) There is a clear and coordinated attack from the right-wing of politics against green energy. If the Tories remain in power I see them conceding at least some ground in that department which will hit SSE's windfarms I presume.
(vi) On the financials, it is now trading at a P/E of 15 which is high-ish for a utility.
(vii) The dividend is due to rebase to around 60p in 2024 and then progressively rise (perhaps 5% p.a.). That would put SSE on a 3.3% yield which is way too low for a utility in my view (even if it is then covered x2 and will increase progressively). I think there will be a few shareholders waking up to that over the next year. I would want at least 5% yield from a utility so at 60p that would put the share price at around £12!
I note Berenberg has a recent price target of £22 and Barclays £20 (no dates when it will reach it though!). So clearly analysts think there might be more to come from this rally. As I said, I am probably better and deciding when the buy than sell! And I am sure I will be a buyer again someday.
Good luck everyone.
Guitarsolo
Yes, the current Grid Price system is by no means perfect. SSE produces Electricity for a certain cost per kilowatt, Another produces for a different cost per kilowatt. Ideally, each utility company should be able to offer their electricity at their own price just like most other businesses. However, utility cos are based in specific areas and those living there would have limited, if any, competition to choose from. Presumably that's why the Grid system was set up so that the average cost going into the grid would be used by utility cos to bill out their electricity, etc... ?? One option for consumers is to install Solar Panels, Wind Energy devices, etc.... and then sell unused units back to the grid, though not everyone can do this. Another option is to minimise use of electricity and gas by eating more cold meals, streamlining necessary cooking, turning off any lights and devices not needed to be on, staggering heating times, etc...
The media are obsessed with talking of the average electricity bill going up to over 4K…average for what: house?, flat? They are scaring the beejeezus out of people…my ma is even talking about giving up smoking, after 60 odd years…a straight percentage would be handier.