Severn Trent stock forecast
The weighted forecast for Severn Trent is 2475.95p in October 2027 and reaches 3598.04p by October 2029. Severn Trent's outcome hinges on funding AMP8 and earning regulated returns from its investment.
Where could Severn Trent's shares be by 2029?
The weighted price is 2475.95p in October 2027, implying a loss of 18% including dividends. By October 2029, it reaches 3598.04p, implying a gain of 25%. The forecast assigns 25% to the bear case, 55% to the base case and 20% to the bull case.
The weighted forecast points to a difficult first year, followed by recovery. The weighted price is 2475.95 in October 2027, an 18% loss with dividends. It reaches 3026.19 in October 2028, a 3% gain. By October 2029 it reaches 3598.04, a 25% gain.
| Case | Probability | October 2027 | October 2028 | October 2029 |
|---|---|---|---|---|
| Bear | 25 % | 1591.49 (-46 %) | 1464.80 (-46 %) | 1434.48 (-43 %) |
| Base | 55 % | 2588.54 (-15 %) | 3108.60 (+6 %) | 3625.93 (+26 %) |
| Bull | 20 % | 3271.93 (+7 %) | 4751.32 (+57 %) | 6225.83 (+108 %) |
| Weighted | 100 % | 2475.95 (-18 %) | 3026.19 (+3 %) | 3598.04 (+25 %) |
What has to go right, and what could go wrong for Severn Trent?
The bear case gives earnings of £390m initially and £420m thereafter. It reaches only £450m because higher interest, operating costs, delays and environmental charges absorb much of the regulated growth. The bull case starts at £550m and reaches £720m. It ends at £900m if efficiency savings, timely investment and service incentives offset financing costs. FY26 already delivered £36m of efficiencies and £18m of energy savings, but free cash flow was negative £1,045m and debt reached £10,880m.
How much cash does Severn Trent really make?
The dividend is not being paid from surplus cash after all investment. In FY26, operational cash was £1.212bn. Cash capital expenditure was £1.884bn, and net interest paid was £341m. Free cash flow was therefore negative £1.046bn, while dividends were £371m; adjusted net debt rose by £1.509bn. That may be sensible if the new infrastructure later earns regulated income, but it makes financing part of the investment case.
| Mar 2026 | Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 | |
|---|---|---|---|---|---|
| Cash from operations | 1,265 | 913 | 813.3 | 749.3 | 890.5 |
| − Capital spending | 1,896 | 1,553 | 1,169.7 | 699.7 | 610.3 |
| − Interest paid | 399 | 312 | 247.3 | 209 | 186.9 |
| = Free cash flow | -1,045 | -966 | -614.2 | -172.5 | 81.2 |
| − Stock pay | 13 | 11 | 10.3 | 9.5 | 8.3 |
| = Real free cash flow | -1,058 | -977 | -624.5 | -182 | 72.9 |
What does an investor pay for Severn Trent today?
A trailing P/E divides today’s price by the last twelve months of earnings. A forward P/E uses an estimate for the next twelve months, so it falls when expected earnings rise. The forward valuation implies about 205p of earnings per share, but that is a forecast. Severn Trent’s adjusted FY26 EPS was 184.4p, compared with statutory EPS of 123.5p. Adjusted earnings exclude items including deferred tax and financial-instrument gains or losses, so the definitions must match before growth can be judged.
| Today (Oct 19, 2026) | |
|---|---|
| Share price | 3,194 |
| Market value (calculated) | 9,648.24 |
| Enterprise value (calculated) | 19,732.24 |
| P/E, last 12 months (calculated) | 25.9x |
| P/E, next 12 months (calculated) | 15.6x |
| Free cash flow yield (calculated) | -10.8% |
What this means. Enterprise value is higher than market value because it adds debt and subtracts cash, but this calculation leaves out lease obligations.