Morningstar

SSE Reaffirms Profit Guidance After 31% Rise in Renewable Generation

We think SSE stock is fairly valued.

Collage illustration for Utilities Sector with Wind Turbine.

Key Morningstar Metrics for SSE

  • Fair Value Estimate
    : GBX 2,600
  • Morningstar Rating
    : ★★★
  • Morningstar Economic Moat Rating
    : None
  • Morningstar Uncertainty Rating
    : Medium

SSE SSE released its trading statement for the three months of fiscal 2027, in which it confirmed its fiscal-year guidance of adjusted EPS in a GBX 168-GBX 193 range, whose midpoint implies an 11% growth.

Why it matters: Network investments jumped by 83%, due to the ramp-up of major projects. This reflects solid execution in the group’s key growth driver. The group said that it is on track to reach its £5 billion investment target in 2027, 39% above 2026.

  • Renewables output grew by 31%, thanks to capacity additions and much more favorable hydro conditions than last year.

The bottom line: We confirm our GBX 2,600 fair value estimate and no-moat rating for SSE. Even if we were to tweak our GBX 167 2027 EPS estimate upward due to the good hydro conditions of the first quarter, this wouldn’t affect our long-term estimates or valuation. Shares appear fairly valued.

Editor's Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.

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