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National Grid (GB:NG)
LSE:NG
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National Grid
(LSE:NG)
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Rating:76Outperform
Price Target:
1,301.00p
▲(12.98% Upside)
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
Capital Investment
National Grid's substantial capital investment supports long-term growth and infrastructure improvements, enhancing its competitive position in the energy sector.
Regulated Asset Growth
The growth in regulated assets ensures stable and predictable revenue streams, reinforcing National Grid's financial stability and market position.
Energy Efficiency Services
The partnership to enhance energy efficiency services aligns with National Grid's strategic focus on sustainability, potentially leading to increased customer engagement and regulatory support.
Negative Factors
High Leverage
High leverage could limit financial flexibility and increase vulnerability to economic fluctuations, impacting long-term financial health.
Cash Flow Inconsistencies
Inconsistent cash flow generation may restrict National Grid's ability to fund new projects and sustain dividend payments, affecting growth prospects.
Project Delays
Delays in key projects can lead to increased costs and regulatory penalties, potentially affecting National Grid's operational efficiency and profitability.
National Grid (NG) vs. iShares MSCI United Kingdom ETF (EWC)
Market Cap
£56.78B
Dividend Yield4.06%
Average Volume (3M)9.07M
Price to Earnings (P/E)18.6
Beta (1Y)0.64
Revenue Growth-7.42%
EPS Growth5.84%
CountryUK
Employees31,425
SectorUtilities
Sector Strength65
IndustryRegulated Electric
Share Statistics
EPS (TTM)0.30
Shares Outstanding4,961,538,000
10 Day Avg. Volume10,299,451
30 Day Avg. Volume9,074,946
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
£1,196.00Price Target Upside3.86% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering9
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
National Grid Business Overview & Revenue Model
Company DescriptionNational Grid (NG) is a multinational electricity and gas utility company based in the UK and the northeastern United States. It plays a critical role in the energy sector by operating the transmission and distribution networks that deliver electricity and gas to millions of customers. National Grid is involved in various sectors, including electricity transmission, gas distribution, and renewable energy solutions, providing essential services that support the energy infrastructure and contribute to the transition towards a low-carbon economy.
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:Nov 06, 2025
(Q2-2026)
| Next Earnings Date:May 14, 2026
Earnings Call Sentiment Positive
The earnings call presented a generally positive outlook with strong financial performance, significant investment commitments, and regulatory support. However, challenges in energy affordability and inflationary pressures remain. Ongoing regulatory discussions add an element of uncertainty.Q2-2026 Updates
Positive Updates
Strong Financial Performance
Underlying operating profit increased by 13% to GBP 2.3 billion, with underlying earnings per share up 6% to 29.8p. Capital investment reached a record GBP 5.1 billion, up 12% year-on-year.
Robust U.K. and U.S. Network Investments
GBP 60 billion capital investment commitment to future-proof networks. Over GBP 5 billion invested in the first half, with a target to deploy over GBP 11 billion this year.
Regulatory and Policy Support
75% of the 5-year investment plan approved in the U.S. with strong regulatory support in the U.K. Important policy developments, including support for the Northeast Supply Enhancement pipeline.
Operational Achievements
Record investment in U.K. Electricity Transmission and Distribution with significant progress in major projects like London Power Tunnels and the ASTI projects.
Improved Synergy Savings
Over GBP 100 million of synergy savings achieved 6 months ahead of target following the U.K. electricity distribution acquisition in 2021.
Negative Updates
Challenges in Energy Affordability
Ongoing concerns about energy affordability, particularly in the U.S., with political pressure around pricing.
Inflationary Pressures
Impact of higher inflation on indexed linked debt, contributing to a 4% increase in net finance costs.
Regulatory Uncertainty
Ongoing discussions with Ofgem regarding the RIIO-T3 framework, with concerns about the baseline return and incentive frameworks.
Company Guidance
In the recent National Grid call, several key metrics and guidance points were highlighted for the fiscal year 2026. The company plans to invest £60 billion in capital investments to future-proof networks, anticipating an investment growth of around 10% per annum. This investment is expected to drive underlying earnings per share growth of 6% to 8%, while maintaining a strong balance sheet and delivering an inflation-protected dividend. In the first half of the fiscal year, National Grid achieved a record capital investment of over £5 billion and is on track to exceed £11 billion in capital investment for the year. Underlying operating profit rose by 13% to £2.3 billion, with underlying earnings per share increasing by 6% to 29.8p. The company also declared an interim dividend of 16.35p per share. National Grid's focus remains on securing supply chains, regulatory approvals, and policy developments to support their strategic investment projects, particularly in the U.K. and U.S. markets.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 require careful management for sustained 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 | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 18.38B | 18.38B | 19.85B | 21.66B | 18.26B | 14.78B |
| Gross Profit | 4.76B | 14.23B | 14.55B | 13.04B | 12.16B | 12.40B |
| EBITDA | 7.27B | 7.63B | 6.83B | 6.91B | 6.27B | 3.89B |
| Net Income | 2.90B | 2.90B | 2.29B | 7.80B | 2.35B | 1.64B |
Balance Sheet | ||||||
| Total Assets | 106.74B | 106.74B | 98.33B | 92.70B | 94.86B | 67.22B |
| Cash, Cash Equivalents and Short-Term Investments | 6.93B | 6.93B | 4.25B | 2.77B | 3.35B | 2.50B |
| Total Debt | 48.36B | 48.36B | 47.07B | 42.98B | 45.47B | 31.22B |
| Total Liabilities | 68.92B | 68.92B | 68.43B | 63.13B | 71.00B | 47.36B |
| Stockholders Equity | 37.80B | 37.80B | 29.87B | 29.54B | 23.83B | 19.84B |
Cash Flow | ||||||
| Free Cash Flow | -2.74B | -2.50B | -514.00M | 6.00M | 728.00M | -327.00M |
| Operating Cash Flow | 6.04B | 6.81B | 6.94B | 6.90B | 6.27B | 4.46B |
| Investing Cash Flow | -10.80B | -10.57B | -7.50B | 240.00M | -14.01B | -5.12B |
| Financing Cash Flow | 5.53B | 4.53B | 987.00M | -7.17B | 7.77B | 750.00M |
National Grid Technical Analysis
Positive
1151.50
Price Trends
1081.25
Positive
1067.87
Positive
1026.84
Positive
Market Momentum
18.86
Positive
68.57
Neutral
49.20
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 1151.5 is above the 20-day moving average (MA) of 1132.37, above the 50-day MA of 1081.25, and above the 200-day MA of 1026.84, indicating a bullish trend. The MACD of 18.86 indicates Positive momentum. The RSI at 68.57 is Neutral, neither overbought nor oversold. The STOCH value of 49.20 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
UnderperformOutperform
Sector (66)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | £56.78B | 18.56 | 8.35% | 4.06% | -7.42% | 5.84% | |
76 Outperform | £20.81B | 17.45 | 12.29% | 3.40% | -3.11% | -31.10% | |
66 Neutral | $17.65B | 18.10 | 5.60% | 3.62% | 6.62% | 11.55% | |
65 Neutral | £8.21B | -35.94 | -5.95% | 2.73% | -4.82% | -123.58% | |
61 Neutral | £8.19B | 30.92 | 13.05% | 4.26% | 10.04% | 108.60% | |
60 Neutral | £8.34B | 36.17 | 12.73% | 4.32% | 3.78% | 50.18% |
* Utilities Sector Average
GB:NG
National Grid
1,151.50
213.18
22.72%
GB:CNA
Centrica
176.65
64.39
57.36%
GB:SVT
Severn Trent
2,818.00
326.78
13.12%
GB:SSE
SSE
1,887.00
235.62
14.27%
GB:NTEA
Northern Electric
127.50
10.75
9.21%
GB:UU
United Utilities
1,218.50
224.09
22.53%
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.