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National Grid (GB:NG)
LSE:NG
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National Grid
(LSE:NG)
Rating:71Outperform
Price Target:
1,157.00p
▲(10.03% Upside)
Positive Factors
Earnings Growth
National Grid's equity story is compelling, with an estimated 8% earnings per share growth from 2025 to 2029.
Financial Stability
There are no incremental equity funding needs until the end of the decade, indicating financial stability.
Negative Factors
Operational Challenges
The NESO report highlighted that the North Hyde substation fire was due to insufficient maintenance, leading to negative headlines and an Ofgem investigation.
National Grid (NG) vs. iShares MSCI United Kingdom ETF (EWC)
Market Cap
£52.17B
Dividend Yield4.44%
Average Volume (3M)8.69M
Price to Earnings (P/E)17.1
Beta (1Y)0.73
Revenue Growth-7.42%
EPS Growth5.84%
CountryUK
Employees31,425
SectorUtilities
Sector Strength87
IndustryRegulated Electric
Share Statistics
EPS (TTM)0.45
Shares Outstanding4,961,230,000
10 Day Avg. Volume7,254,086
30 Day Avg. Volume8,685,368
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)0.00
Price to Sales (P/S)0.00
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
£1,189.38Price Target Upside13.11% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering13
National Grid Business Overview & Revenue Model
Company DescriptionNational 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 MoneyNational Grid generates revenue primarily through its regulated utility operations, which include the transmission and distribution of electricity and gas. The company earns money by charging customers for the energy they consume, based on rates set by regulatory authorities. Additionally, National Grid benefits from long-term contracts for electricity and gas transportation services. Key revenue streams include charges for the use of its transmission networks, which are typically regulated and provide stable cash flows. The company also invests in renewable energy projects and energy efficiency programs, contributing to its revenue through various incentives and government subsidies. Strategic partnerships with energy suppliers and involvement in market mechanisms further enhance its earnings potential.
National Grid Earnings Call Summary
Earnings Call Date:May 15, 2025
(Q4-2025)
| % Change Since: 6.62%|
Next Earnings Date:Nov 06, 2025
Earnings Call Sentiment Positive
The earnings call presented a strong financial performance with record capital investments and significant progress in major projects. However, challenges such as the impact of Storm Darragh, the impairment on the U.S. offshore wind project, and concerns about the RIIO-T3 financial framework were noted.Q4-2025 Updates
Positive Updates
Record Capital Investment
National Grid delivered a record capital investment of £9.8 billion, reflecting a 20% increase from the previous year, with significant progress in major projects across the UK and the Northeast U.S.
Strong Financial Performance
Underlying operating profit increased by 12% to £5.4 billion, and underlying earnings per share rose by 2% to 73.3p, slightly ahead of guidance.
Regulated Asset Growth
The company reported regulated asset growth of 10.5%, driven by substantial capital investment.
Dividend Increase
The Board declared a final dividend of 30.88p per share, bringing the total annual dividend to 46.72p, an increase of 3.21%.
UK Electricity Transmission Success
Investment in UK Electricity Transmission increased by 57% to £3 billion, with significant projects like the UK's largest battery storage and offshore wind farm connections.
Negative Updates
Storm Darragh Impact on UK Electricity Distribution
The severe weather event caused significant costs and lower-than-anticipated allowances, impacting the return on equity in the UK Electricity Distribution sector.
Community Offshore Wind Impairment
National Grid paused development activity on its U.S. offshore wind project due to policy uncertainty, leading to a £303 million impairment.
Challenges in Meeting NIRO-T3 Financial Framework
Concerns about securing an investable RIIO-T3 framework that balances returns, cash characteristics, and incentives were highlighted.
Company Guidance
In the call, National Grid's CEO, John Pettigrew, provided guidance for their five-year financial framework and investment strategy. The company plans to invest £60 billion, targeting an asset growth of around 10% per annum and an underlying earnings per share increase of 6% to 8%. They aim to maintain a strong balance sheet while delivering an inflation-protected dividend. In the first year, National Grid achieved a record capital investment of £9.8 billion, 20% higher than the previous year, driving regulated asset growth of 10.5%. The underlying operating profit rose by 12% to £5.4 billion, with an underlying earnings per share of 73.3p, slightly above guidance. The company has secured supply chain and delivery mechanisms for more than two-thirds of their planned capital investment, advancing key projects in both the UK and the U.S.National Grid Financial Statement Overview
Summary
National Grid shows operational efficiency and effective equity use, but faces revenue fluctuations and high leverage. Strong profitability indicators are offset by cash flow inconsistencies and debt concerns, necessitating careful management for sustainable growth.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.75
Positive
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.70
Positive
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.65
Positive
| Breakdown | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 18.38B | 19.85B | 21.66B | 18.26B | 14.78B |
| Gross Profit | 14.23B | 14.55B | 13.04B | 12.16B | 12.40B |
| EBITDA | 7.63B | 6.83B | 6.91B | 6.27B | 3.89B |
| Net Income | 2.90B | 2.29B | 7.80B | 2.35B | 1.64B |
Balance Sheet | |||||
| Total Assets | 106.74B | 98.33B | 92.70B | 94.86B | 67.22B |
| Cash, Cash Equivalents and Short-Term Investments | 6.93B | 4.25B | 2.77B | 3.35B | 2.50B |
| Total Debt | 48.36B | 47.07B | 42.98B | 45.47B | 31.22B |
| Total Liabilities | 68.92B | 68.43B | 63.13B | 71.00B | 47.36B |
| Stockholders Equity | 37.80B | 29.87B | 29.54B | 23.83B | 19.84B |
Cash Flow | |||||
| Free Cash Flow | -2.50B | -514.00M | 6.00M | 728.00M | -327.00M |
| Operating Cash Flow | 6.81B | 6.94B | 6.90B | 6.27B | 4.46B |
| Investing Cash Flow | -10.57B | -7.50B | 240.00M | -14.01B | -5.12B |
| Financing Cash Flow | 4.53B | 987.00M | -7.17B | 7.77B | 750.00M |
National Grid Technical Analysis
Positive
1051.50
Price Trends
1054.22
Negative
1035.19
Positive
984.06
Positive
Market Momentum
-1.02
Positive
48.17
Neutral
14.96
Positive
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 1051.5 is below the 20-day moving average (MA) of 1062.20, below the 50-day MA of 1054.22, and above the 200-day MA of 984.06, indicating a neutral trend. The MACD of -1.02 indicates Positive momentum. The RSI at 48.17 is Neutral, neither overbought nor oversold. The STOCH value of 14.96 is Positive, 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 (67)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | £52.17B | 17.06 | 8.35% | 4.44% | -7.42% | 5.84% | |
69 Neutral | £19.60B | 16.47 | 12.29% | 3.60% | -3.11% | -31.10% | |
67 Neutral | $17.91B | 18.75 | 8.12% | 3.40% | 7.32% | 12.41% | |
67 Neutral | £7.76B | 29.30 | 13.05% | 4.56% | 10.04% | ― | |
66 Neutral | £7.95B | 6.18 | -5.95% | 2.45% | -4.82% | -123.58% | |
62 Neutral | £7.75B | 33.61 | 12.73% | 4.71% | 3.78% | 50.18% | |
| ― | £147.39M | 1.28 | 6.18% | ― | ― |
* Utilities Sector Average
Performance Comparison
GB:NG
National Grid
1,051.50
112.41
11.97%
GB:CNA
Centrica
168.10
44.46
35.96%
GB:SVT
Severn Trent
2,613.00
175.31
7.19%
GB:SSE
SSE
1,782.00
-39.15
-2.15%
GB:NTEA
Northern Electric
130.50
13.42
11.46%
GB:UU
United Utilities
1,137.50
183.90
19.28%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.