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- 1 UU stock price prediction: The stock has experienced a bearish trend since April as the trend line confirms.
- 2 The company is performing poorly financially with a 0% CAGR of revenue for 4 years.
- 3 The current price is near the downtrend, look for the levels below.
Being one of the leading providers of water and wastewater services, United Utilities Group Plc (LON: UU) needs to provide more returns to its shareholders. Looking back 4 years, the absolute return has been just 20%. It is just 4.6% on a CAGR basis.
When the carpet of candlesticks is uncovered, we see the culprit is the fundamentals. The company has made a revenue growth of 0% since 2019, with the same value of £1.28B in the financial year 23. While the revenue is the same, profit margins got even worse. The operating margin, for example, went from 34% in 2021 to 20%.
A deep dive into Key Performance Ratios
Looking deeper into the key performance ratios, it is seen that about five years ago, the returns on capital invested in the business were 5.5%. However, as we saw above, these returns have substantially decreased since then.
It is worth noting that the amount of capital employed within the business has remained relatively steady. It means that the firm is not able to generate enough Earnings before interest and taxes (EBIT). Companies with these attributes often tend to be mature and face competition that puts pressure on their margins. Yet, they are not necessarily shrinking or steady like United Utilities Group.
Technical Analysis and Prediction of the UU Stock Price
The Previous Price Action of the UU Stock
During the bullish phase of the London Stock Exchange (LSE), the stock price of UU also rose in October of last year. The stock successfully broke the major resistance level of £1009, but then entered a consolidation zone with a cap of £1095 and the floor of the previously broken resistance.
Currently, the stock has dropped below its previous floor of £1009 and is trading at the level of £948. It hit the immediate resistance of £1009, but as the bears reclaimed it, the UU stock price dropped to its immediate support level of £906.
The Trend Line and RSI Crossover
The trend line is showing a bearish trend, although the bulls are attempting to push the stock price up to the immediate resistance level once again. In order to do that, they will first have to break the trendline as it stands in the way.
Looking at the RSI levels, it is at 47. It is still below its SMA of 54, which means the current bullish strength is subsequently low compared to 14 days ago. If the investors can make it past the resistance, it will cause a bullish crossover between RSI and its SMA.
Conclusion
The United Utilities Group Plc stock price has been performing below the Lehman lately because of its poor financial performance. The UU stock price is currently in a downtrend. The investors are advised to wait untill the price breaks and sustains above the current trend line.
Technical Levels
Support: £906, and £822
Resistance: £1009, and £1095
Disclaimer
The views and opinions stated by the author, or any people named in this article, are for informational purposes only. They do not establish financial, investment, or other advice. Investing in or trading crypto assets comes with a risk of financial loss.
Adarsh Singh is a true connoisseur of Defi and Blockchain technologies, who left his job at a “Big 4” multinational finance firm to pursue crypto and NFT trading full-time. He has a strong background in finance, with MBA from a prestigious B-school. He delves deep into these innovative fields, unraveling their intricacies. Uncovering hidden gems, be it coins, tokens or NFTs, is his expertise. NFTs drive deep interest for him, and his creative analysis of NFTs opens up engaging narratives. He strives to bring decentralized digital assets accessible to the masses.
