National Grid (NG) AI Stock Analysis

• Market Cap: £53.35B
• Dividend Yield: 5.02%
• Average Volume (3M): 10.76M
• Price to Earnings (P/E): 17.7
• Beta (1Y): 0.79
• Revenue Growth: -6.68%
• EPS Growth: -77.57%
• Country: UK
• Employees: 31,425
• Sector: Utilities
• Sector Strength: 82
• Industry: Regulated Electric
• EPS (TTM): 0.45
• Shares Outstanding: 4,901,261,700
• 10 Day Avg. Volume: 14,107,049
• 30 Day Avg. Volume: 10,760,158
• PEG Ratio: -0.22
• Price to Book (P/B): 1.17
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -55.50
• 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: £1,159.00
• Price Target Upside: 6.48% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 9

• Rating: 67 Neutral
• Price Target: ―

National Grid's stock score is driven by stable financial performance with strong margins, but offset by high leverage and cash flow challenges. Technical analysis shows a neutral trend, while valuation is supported by a decent P/E ratio and high dividend yield. Positive earnings call guidance and strategic investments add to the score, despite operational challenges.

Positive Factors

Earnings Visibility

The group now offers particularly high levels of earnings, dividend, and capex visibility following the £7bn capital raise.

Growth Potential

The plan includes significant investments on the existing network and network expansion, indicating strong future growth potential.

Investment Plan

The £35bn Totex plan is a step change in investment well flagged and expected by the market.

Negative Factors

Asset Divestment

Recent press reports suggest consideration of around $1bn for the Renewable business, indicating potential above its book value.

Regulatory Risks

Potential catalysts include divestments of non-core assets and a potentially more benign stance from the regulator Ofgem on UK Electricity Transmission.

National Grid Business Overview & Revenue Model

Company Description

National Grid (NG) is a major multinational electricity and gas utility company headquartered in the United Kingdom. The company operates in the UK and the northeastern United States, focusing on the transmission and distribution of electricity and gas. National Grid plays a critical role in connecting millions of people to the energy they use, ensuring the safe and reliable delivery of power and natural gas to homes and businesses. The company is involved in various sectors, including electricity transmission, gas distribution, and renewable energy integration.

How the Company Makes Money

National 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.

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.

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.

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

• Technical Analysis Sentiment: Positive
• Last Price: 1088.50
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

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 1088.5 is above the 20-day moving average (MA) of 1063.63, above the 50-day MA of 1027.45, and above the 200-day MA of 987.04, indicating a bullish trend. The MACD of 12.22 indicates Negative momentum. The RSI at 60.50 is Neutral, neither overbought nor oversold. The STOCH value of 91.60 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GB:NG.

National Grid Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DRX	82 Outperform	£2.24B	4.61	26.02%	4.11%	-22.46%	-3.74%
SVT	71 Outperform	£8.14B	35.42	12.73%	4.28%	5.38%	86.34%
SSE	71 Outperform	£19.77B	16.62	12.29%	3.48%	-13.09%	231.40%
NG	67 Neutral	£53.35B	17.66	8.35%	5.02%	-6.68%	-77.57%
UU	64 Neutral	£7.80B	29.48	13.05%	4.41%	8.61%	―
Sector *	63 Neutral	$8.47B	10.31	4.67%	4.37%	4.05%	-12.96%
PNN	56 Neutral	£2.42B	―	-4.09%	6.87%	20.25%	-128.71%