National Grid (NG) AI Stock Analysis

• Market Cap: £61.30B
• Dividend Yield: 4.15%
• Average Volume (3M): 9.07M
• Price to Earnings (P/E): 21.3
• Beta (1Y): 0.76
• Revenue Growth: -9.52%
• EPS Growth: 35.74%
• Country: UK
• Employees: 31,425
• Sector: Utilities
• Sector Strength: 65
• Industry: Regulated Electric
• EPS (TTM): 0.30
• Shares Outstanding: 4,971,309,000
• 10 Day Avg. Volume: 10,299,451
• 30 Day Avg. Volume: 9,074,946
• PEG Ratio: 3.11
• Price to Book (P/B): 1.26
• Price to Sales (P/S): 2.59
• P/FCF Ratio: -19.02
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: £1,358.33
• Price Target Upside: 10.16% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 13
• EPS Forecast (FY): 0.78
• Revenue Forecast (FY): £19.40B

• Rating: 76 Outperform
• Price Target: 1,437.00 p ▲(16.55% Upside)
• Action: Reiterated Date: 11/06/25
• Date: Action: Reiterated 11/06/25

National Grid's strong operational efficiency and effective investment strategy are significant strengths, supported by positive technical indicators and a solid earnings call. However, high leverage and cash flow inconsistencies pose risks that need careful management.

Positive Factors

Regulated revenue model

National Grid’s regulated business model produces allowed revenues determined by regulators, giving relatively predictable cash flows and returns tied to invested assets. This structural revenue protection supports multi-year planning, capital deployment and lowers commodity exposure.

Large committed investment program

A GBP 60bn multi-year capex program materially expands the regulated asset base, creating durable earnings growth potential through higher allowed returns. With substantial investment and regulatory approvals underway, the plan underpins multi-year EPS guidance and long-term service relevance.

Operational execution & synergies

Recent results show improving operating profit and early delivery of >GBP100m synergies, indicating effective integration and cost control. Sustainable efficiency gains strengthen margins, improve cash conversion potential and reduce incremental funding needs for ongoing capex.

Negative Factors

High leverage

A debt-to-equity ratio above 1 raises refinancing and interest-cost risk, especially with inflation-linked liabilities. High leverage constrains balance sheet flexibility to fund overruns or absorb shocks and increases sensitivity to higher market rates over the medium term.

Weak free cash flow

Consistent negative or inconsistent free cash flow limits the company’s ability to self-fund large capex, increasing dependence on external financing. This can raise financing costs, pressure liquidity metrics and constrain discretionary actions like higher incremental investments or payout flexibility.

Revenue decline & regulatory risk

A declining revenue trend and volatile net margins reduce earnings durability, while ongoing regulatory discussions and political pressure on affordability could limit allowed returns or impose remediation. Together these factors heighten execution risk and potential constraints on long-run profitability.

National Grid Business Overview & Revenue Model

Company Description

National Grid plc transmits and distributes electricity and gas. The company operates through UK Electricity Transmission, UK Electricity Distribution, UK Electricity System Operator, New England, and New York segments. The UK Electricity Transmission segment provides electricity transmission and construction work services in England and Wales. The UK Electricity Distribution segment offers electricity distribution services in Midlands, and South West of England and South Wales. The UK Electricity System Operator segment provides balancing services for supply and demand of electricity on Great Britain's electricity transmission system; and acts as an agent on behalf of transmission operators. The New England segment offers electricity and gas distribution, and electricity transmission services in New England. The New York segment provides electricity and gas distribution, and electricity transmission services in New York. It also engages in the provision of transmission services through electricity interconnectors and LNG importation at the Isle of Grain; sale of renewables projects; and leasing and sale of commercial property, as well as insurance activities in the United Kingdom. The company was founded in 1990 and is headquartered in London, the United Kingdom.

How the Company Makes Money

National Grid primarily makes money by operating regulated energy networks and earning revenue set through regulatory frameworks rather than through competitive retail energy sales. Key revenue streams include: (1) Regulated network charges: In both the UK and US, the company recovers allowed revenues through tariffs/charges paid by network users (such as energy suppliers, shippers, generators, and end customers depending on the jurisdiction and rate design). Regulators determine an allowed revenue requirement that typically reflects operating costs, depreciation, taxes, and an allowed return on the regulated asset base (rate base), which is intended to compensate the company for investing capital in long-lived grid infrastructure. (2) Capital investment and asset base growth: Because allowed returns are generally earned on the value of regulated assets, National Grid’s earnings are materially influenced by its ability to invest in and expand/upgrade transmission and distribution infrastructure (e.g., reinforcement, connections, reliability, and modernization programs), subject to regulatory approval and performance requirements. (3) Performance-based incentives and pass-through mechanisms: Regulatory regimes commonly include incentive mechanisms that can increase or decrease revenue/earnings based on service quality, reliability, safety, customer outcomes, and delivery of approved programs; many external cost items may be passed through to customers via rates with limited margin impact. (4) Service and connection-related revenues: The company can earn fees associated with new connections, engineering services, and other regulated service activities, with specifics varying by jurisdiction and tariff. Significant factors influencing earnings include regulatory determinations (rate cases and multi-year price controls), approved capital plans, authorized returns, cost control, reliability/performance outcomes, and financing costs (because regulated returns and cash flows support debt funding of large infrastructure programs). Partnerships or counterparties that matter economically are primarily the regulated ecosystem: governmental and independent regulators, and the network customers (utilities/suppliers/shippers/generators and end users) who pay approved tariffs; any additional partnership-specific revenue details not publicly specified here are null.

National Grid Financial Statement Overview

Summary

National Grid shows strong operational efficiency and effective use of equity, but faces challenges with revenue fluctuations and high leverage. Profitability indicators are robust, yet cash flow inconsistencies and debt levels are concerning.

Income Statement

The company demonstrates a solid gross profit margin consistently over 100%, indicating strong pricing power and cost control. However, its net profit margin shows volatility, with a noticeable dip in 2024. Revenue has experienced fluctuations, with a declining trend in recent years, impacting overall financial performance. Despite this, EBIT and EBITDA margins remain robust, pointing to operational efficiency.

Balance Sheet

The company's balance sheet reveals a high level of debt, with a debt-to-equity ratio exceeding 1. This leverage poses potential risks in volatile markets. However, the return on equity remains relatively strong, demonstrating effective use of equity capital. The equity ratio shows a stable capital structure, reflecting a balanced asset financing strategy.

Cash Flow

The cash flow statement highlights challenges with negative free cash flow in recent years, which could limit investment opportunities. Free cash flow growth has been negative, showing inconsistencies in cash generation. Yet, the operating cash flow to net income ratio remains healthy, indicating good cash conversion from earnings.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	17.48B	18.38B	19.85B	21.66B	18.45B	13.66B
Gross Profit	12.03B	18.38B	19.85B	21.66B	18.45B	13.66B
EBITDA	7.09B	6.79B	7.28B	5.84B	6.04B	3.59B
Net Income	2.87B	2.90B	2.29B	7.80B	2.35B	1.64B
Balance Sheet
Total Assets	103.76B	106.74B	98.33B	92.70B	94.86B	67.22B
Cash, Cash Equivalents and Short-Term Investments	4.06B	6.93B	4.25B	2.77B	3.35B	2.50B
Total Debt	45.91B	48.36B	47.07B	42.98B	45.47B	31.22B
Total Liabilities	66.54B	68.92B	68.43B	63.13B	71.00B	47.36B
Stockholders Equity	37.19B	37.80B	29.87B	29.54B	23.83B	19.84B
Cash Flow
Free Cash Flow	-2.22B	-2.50B	-514.00M	6.00M	728.00M	-327.00M
Operating Cash Flow	7.02B	6.81B	6.94B	6.90B	6.27B	4.46B
Investing Cash Flow	-5.13B	-10.57B	-7.50B	240.00M	-14.01B	-5.12B
Financing Cash Flow	-2.46B	4.53B	987.00M	-7.17B	7.77B	750.00M

National Grid Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 1233.00
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:NG, the sentiment is Negative. The current price of 1233 is below the 20-day moving average (MA) of 1348.88, below the 50-day MA of 1293.78, and above the 200-day MA of 1132.69, indicating a neutral trend. The MACD of -3.03 indicates Positive momentum. The RSI at 31.28 is Neutral, neither overbought nor oversold. The STOCH value of 8.44 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GB:NG.

National Grid Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NG	76 Outperform	£61.30B	21.31	7.87%	4.15%	-9.52%	35.74%
SSE	74 Outperform	£31.01B	16.49	7.09%	2.98%	1.78%	-50.72%
UU	72 Outperform	£8.64B	8.14	20.43%	4.45%	15.76%	254.82%
SVT	71 Outperform	£8.91B	8.54	17.41%	4.50%	10.68%	35.18%
Sector *	66 Neutral	$17.65B	18.10	5.60%	3.62%	6.62%	11.55%
CNA	59 Neutral	£9.17B	-112.68	1.68%	2.86%	-4.82%	-123.58%