National Grid PLC
🇬🇧 NG.LSE · London · GB00BDR05C01
Utilities
GBX 1281.00 price at analysis
Scores
Key Metrics
Powered by EODHDP/E (TTM)
21.9
P/E (Price-to-Earnings)Shows how much investors pay for each $1 of profit. We display the TTM P/E (Trailing Twelve Months) which uses actual earnings from the last 4 quarters. This is more reliable than Forward P/E which uses analyst estimates.
Calculation: 1281.00 ÷ 58.38 = 21.9
TTM period through: 2025-09-30
Forward P/E (estimated): 14.4
Based on analyst estimates
Reference: Provider P/E (Trailing): 21.4
Yield (Fwd)
3.67%
Dividend YieldThe Forward yield (Fwd) shows the next announced annual dividend / current price — what you'd earn going forward. The Trailing yield (TTM) in the tooltip shows dividends actually paid in the last 12 months. Forward is shown as primary because it reflects the company's current commitment to shareholders.
Trailing Yield (TTM): 3.67%
Net Debt/EBITDA (TTM)
6.3x
Latest quarter: 16.6x
Net Debt / EBITDAA leverage ratio showing how many years of EBITDA (earnings before interest, taxes, depreciation, and amortization) it would take to repay net debt. EBITDA approximates operating cash generation. Lower ratios (e.g., <3x) are generally safer; higher (e.g., >5x) may indicate more financial risk.
TTM through: 2025-09-30
Latest quarter (2025-09-30): 16.6x
The quarterly value can spike when quarterly EBITDA is very low (e.g., one-time charges).
Quick guide: <2x manageable, >4x can be risky (sector-dependent).
Payout (Fwd)
80.5%
Payout RatioDividends as a percentage of earnings. The Forward payout (Fwd) uses the announced dividend divided by actual past earnings (TTM) — it tells you if the company can afford what it promised. Very high payouts can be risky, especially if profits fall.
Announced dividend / actual earnings (TTM)
Payout (TTM): 56.1%
Cash Flow Payout (TTM): 25.5%
FCF Coverage (TTM): -1.38x
ROE
7.9%
ROE (Return on Equity)A profitability measure: how much profit is generated from shareholders’ equity. Higher isn’t always better if it comes from high debt.
EV/EBITDA
13.5x
EV/EBITDAA valuation ratio that compares total business value (including debt) to EBITDA. Lower can mean cheaper, but context matters.
📊 What Changed From Last Analysis?
Moved from WATCH to OPTIMAL: Recent price moderation to 1,281 GBX combined with a forward P/E of 14.4x and a highly attractive P/FFO of 9.79x shifts the valuation profile to undervalued, trading significantly below its infrastructure-specific P/FFO fair value range.
Summary
National Grid is a world-class regulated utility operating critical energy transmission monopolies with highly predictable revenues. The recent dividend reset was a strategic move to fund a massive £70 billion growth plan and secure long-term asset expansion, not a sign of distress. Trading at 1,281 GBX, well below our P/FFO fair value range of 1,569-2,354 GBX (P/FFO 9.8x), this represents an attractive entry point for dividend investors seeking quality infrastructure exposure. Consider accumulating below 1,400 GBX for a margin of safety while collecting the 3.7% yield.
Sector Context
National Grid operates critical electricity and gas transmission and distribution networks in the UK and US, earning regulated returns on its monopolistic infrastructure assets. In the utility sector, massive capital investments for the energy transition cause temporary negative free cash flow but drive long-term regulated asset base growth, making P/FFO (Price to Funds From Operations) a significantly more accurate valuation metric than traditional GAAP P/E.
Temporary Opportunity Identified
Market apprehension regarding the recent 24% strategic dividend reset and massive £70 billion CapEx program, compounded by short-term sentiment hits from US regulatory adjustments and storm costs.
📊 Strategy Analysis
- • Trading at 1,281 GBX, well below our infrastructure-specific P/FFO fair value range of 1,569-2,354 GBX, offering significant upside to fair value alongside a highly attractive P/FFO multiple of 9.79x.
- • Forward P/E has compressed to 14.4x, an attractive valuation for an irreplaceable natural monopoly with highly visible inflation-linked regulated earnings.
- • The recent 24% dividend adjustment to a 3.7% yield is a prudent strategic reset to fund a proven £70 billion energy transition investment plan, rather than a sign of fundamental business deterioration.
⚠ What to Watch
- • Massive capital expenditure requirements have resulted in negative Free Cash Flow (-£1.62B), meaning organic FCF does not currently cover the dividend after growth investments.
- • Elevated Net Debt/EBITDA of 6.35x, while typical for a heavily investing regulated utility, requires monitoring amid persistent global inflation and high capital costs.
- • Near-term earnings face minor headwinds from recent US regulatory charges (FERC judgment) and higher-than-expected storm costs, as flagged in a recent pre-close trading update.
📊 Historical Trends (10 Years)
Powered by EODHDThese charts show how key metrics have evolved over the past decade, helping you identify if the company is improving or deteriorating.
Debt Evolution (Net Debt / EBITDA)
Lower values are better. A declining trend indicates the company is reducing its debt (deleveraging).
Revenue & Earnings Growth
Consistent growth in revenueRevenue
The money a company brings in from selling its products or services. It’s the top line before costs. (blue) and earningsEarnings (Profit)
What’s left after expenses. Positive earnings mean the business made a profit; negative means a loss. (green) indicates a healthy business. Look for upward trends and recoveries after temporary dips.
Dividend Sustainability (FCF vs Dividends Paid)
Free cash flowFree Cash Flow
Cash left after the company pays for running the business and maintaining it. Often used to fund dividends, pay debt, or buy back shares. (FCFFCF (Free Cash Flow)
Short for Free Cash Flow: cash left after operating needs and maintenance spending., blue) should cover dividends paidDividends Paid
Cash the company paid out to shareholders. It’s not guaranteed and can change over time. (green). If dividends consistently exceed FCFFCF (Free Cash Flow)
Short for Free Cash Flow: cash left after operating needs and maintenance spending., the dividend may be at risk.
Analysis date: 2026-04-18
Disclaimer: This information is for educational purposes only. Not financial advice.