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National Grid (GB:NG)
LSE:NG
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National Grid
(LSE:NG)
66Neutral
Positive Factors
Investment and Growth
The plan includes significant investments on the existing network and network expansion, indicating strong future growth potential.
Market Valuation
National Grid trades at a discount on a 12.0x calendar 2026E P/E compared to its European network peers like Terna and Redeia.
Negative Factors
Regulatory Environment
Potential catalysts include divestments of non-core assets and a potentially more benign stance from the regulator Ofgem on UK Electricity Transmission.
National Grid (NG) vs. S&P 500 (SPY)
Market Cap
£46.81B
Dividend Yield5.75%
Average Volume (3M)8.99M
Price to Earnings (P/E)22.1
Beta (1Y)0.91
Revenue Growth-6.68%
EPS Growth-77.57%
CountryUK
Employees31,425
SectorUtilities
Sector Strength84
IndustryRegulated Utilities
Share Statistics
EPS (TTM)0.43
Shares Outstanding4,892,260,700
10 Day Avg. Volume11,239,014
30 Day Avg. Volume8,987,522
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)2.42
Price to Cash Flow (P/CF)9.00
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
1,128.63pPrice Target Upside17.96% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering9
National Grid Business Overview & Revenue Model
Company DescriptionNational Grid PLC owns and operates the electric and gas transmission system in England and Wales. In 2019, it divested its U.K. natural gas distribution business. In the Northeastern United States, it serves 7.1 million electricity and gas customers combined in three states. It also owns regulated transmission and electricity generation in the United States, metering services, merchant transmission lines in the U.K., and the Grain (U.K.) liquefied natural gas facility.
How the Company Makes MoneyNational Grid makes money through several key revenue streams, primarily from the regulated transmission and distribution of electricity and gas. In the UK, the company operates electricity transmission networks and gas distribution networks, earning revenue through tariffs regulated by Ofgem, the UK energy regulator. In the United States, National Grid owns and operates electricity and gas distribution networks in states like New York, Massachusetts, and Rhode Island, where revenue is generated through rates approved by state public utility commissions. Additionally, National Grid is involved in non-regulated activities such as energy services and solutions, which provide ancillary revenue, including renewable energy projects and energy efficiency services. Significant partnerships with government bodies and other utilities, as well as investments in modernizing infrastructure and integrating renewable energy sources, are crucial factors that contribute to its earnings.
National Grid Financial Statement Overview
Summary
National Grid demonstrates strong operational efficiency with high gross and EBIT margins. However, inconsistent revenue growth and declining net income have affected profitability. The balance sheet shows typical industry leverage, posing potential risks due to high debt levels. Cash flow challenges, specifically in free cash flow, need addressing to secure long-term stability.Income Statement
The company exhibits solid gross profit and EBIT margins, indicative of strong operational efficiency. However, there has been a decline in net profit margin from the previous year, primarily due to a significant drop in net income. Revenue growth has been inconsistent, with a notable decline in the most recent year. Despite these challenges, the company's EBITDA margin remains healthy, suggesting resilience in core earnings.75
Positive
Balance Sheet
National Grid shows a moderately high debt-to-equity ratio, reflecting a significant use of leverage, which is typical in the utilities sector. The equity ratio is stable, indicating a balanced capital structure. However, the Return on Equity has decreased, signaling potential issues in generating returns for shareholders. While the balance sheet is stable, the high leverage could pose risks if interest rates rise.70
Positive
Cash Flow
The cash flow statement reveals challenges in free cash flow generation, with negative free cash flow in the latest year due to high capital expenditures. Despite this, the operating cash flow remains strong, exceeding net income, which indicates good cash-generating capability from operations. The company needs to address its capital expenditure to improve free cash flow sustainability.60
Neutral
| Breakdown | ||||
| Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 19.85B | 21.66B | 18.26B | 14.78B | 14.54B | Gross Profit |
| 14.55B | 13.04B | 12.16B | 12.40B | 11.95B | EBIT |
| 4.47B | 4.88B | 4.37B | 2.90B | 2.78B | EBITDA |
| 6.83B | 6.91B | 6.27B | 3.89B | 4.36B | Net Income Common Stockholders |
| 2.29B | 7.80B | 2.35B | 1.64B | 1.26B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 4.25B | 2.77B | 3.35B | 2.50B | 2.07B | Total Assets |
| 98.33B | 92.70B | 94.86B | 67.22B | 67.09B | Total Debt |
| 47.07B | 42.98B | 45.47B | 31.22B | 30.79B | Net Debt |
| 46.52B | 42.82B | 45.26B | 31.06B | 30.72B | Total Liabilities |
| 68.43B | 63.13B | 71.00B | 47.36B | 47.51B | Stockholders Equity |
| 29.87B | 29.54B | 23.83B | 19.84B | 19.56B |
| Cash Flow | Free Cash Flow | |||
| -514.00M | 6.00M | 728.00M | -327.00M | -282.00M | Operating Cash Flow |
| 6.94B | 6.90B | 6.27B | 4.46B | 4.62B | Investing Cash Flow |
| -7.50B | 240.00M | -14.01B | -5.12B | -3.19B | Financing Cash Flow |
| 987.00M | -7.17B | 7.77B | 750.00M | -1.61B |
National Grid Technical Analysis
Positive
956.80
Price Trends
957.90
Negative
962.22
Negative
955.33
Positive
Market Momentum
-4.50
Positive
49.73
Neutral
49.85
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:NG, the sentiment is Positive. The current price of 956.8 is below the 20-day moving average (MA) of 956.88, below the 50-day MA of 957.90, and above the 200-day MA of 955.33, indicating a neutral trend. The MACD of -4.50 indicates Positive momentum. The RSI at 49.73 is Neutral, neither overbought nor oversold. The STOCH value of 49.85 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GB:NG.
National Grid Risk Analysis
National Grid disclosed 9 risk factors in its most recent earnings report. National Grid reported the most risks in the “Macro & Political” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
National Grid Peers Comparison
Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
66 Neutral | £46.81B | 22.15 | 5.28% | 5.75% | -6.68% | -77.57% | |
65 Neutral | £16.24B | 8.32 | 21.94% | 4.16% | -13.09% | 231.40% | |
65 Neutral | $11.91B | 15.60 | 6.55% | 4.41% | 7.00% | 0.55% | |
62 Neutral | £2.04B | 4.15 | 26.02% | 4.26% | -22.46% | -3.68% | |
61 Neutral | £7.39B | 30.78 | 17.17% | 4.96% | 5.38% | 86.34% | |
56 Neutral | £6.76B | 59.13 | 5.50% | 5.14% | 8.61% | ― | |
50 Neutral | £1.92B | ― | -4.09% | 8.95% | 20.25% | -128.71% |
* Utilities Sector Average
Performance Comparison
GB:NG
National Grid
956.80
60.60
6.76%
GB:DRX
Drax Group plc
561.50
101.57
22.08%
GB:PNN
Pennon Group plc
395.40
-99.40
-20.09%
GB:SVT
Severn Trent
2,487.00
54.84
2.25%
GB:SSE
SSE
1,493.00
-34.31
-2.25%
GB:UU
United Utilities
991.20
-0.26
-0.03%
National Grid Earnings Call Summary
Earnings Call Date: Nov 7, 2024 | % Change Since: -1.09% | Next Earnings Date: May 15, 2025
Earnings Call Sentiment Positive
The earnings call reflects National Grid's strong financial performance and strategic positioning for future growth through increased investments and successful regulatory engagements. However, challenges in equipment supply and lower profitability in specific ventures present areas for improvement.Highlights
Record Investment in Capital Projects
National Grid's investment reached a record £4.6 billion in the first half, marking a 19% increase year-on-year at constant currency.
Successful Rights Issue Completion
The company completed a £7 billion rights issue, positioning its balance sheet for future growth.
Strong Financial Performance
Underlying operating profit increased by 15% to £2 billion, with underlying earnings per share up 8% to 28.1p.
Positive Regulatory Developments
New rates agreed for New York and Massachusetts businesses, providing greater investment plan visibility.
Reliable Service Delivery
Despite severe weather, reliability remains strong across UK and US networks with rapid outage restorations.
Lowlights
Lower Profit in National Grid Ventures
A decrease of £70 million in underlying profit due to adjustments and lower profitability across US Ventures businesses.
Challenges in Securing Equipment
Concerns over long lead times for critical transformers and equipment supply constraints.
Company Guidance
During the National Grid Half Year Results Presentation, CEO John Pettigrew provided guidance on the company's strategic initiatives and financial performance. National Grid plans to invest around £60 billion in its networks over the next five years, with £4.6 billion already invested in the first half of the fiscal year. The company successfully completed a £7 billion rights issue to bolster its balance sheet. In the U.S., regulated CapEx increased by 20% year-on-year, driven by a $4 billion upgrade program in upstate New York. The UK electricity transmission capital investment rose by 43% to £1.3 billion, with significant progress on major projects like the London Power Tunnels. National Grid reported an operating profit of £2 billion, a 15% increase from the prior year, and declared a 15.84p per share interim dividend. The company's focus remains on delivering a low-risk, high-quality asset growth strategy, with strong earnings growth and an inflation-protected dividend.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.