National Grid Tops Its Expectations for Fiscal 2021; Shares Rich

We don't plan to materially change our fair value estimate of GBX 800 per share after National Grid released fiscal 2021 results above the consensus it polled and in line with our estimates. The company also set pro forma guidance roughly in line with our estimates. Our no-moat, stable trend ratings are intact. The company will pay a GBX 49.16 dividend on 2021 results, 1.2% higher than last year, implying a 5.3% dividend yield and slightly below consensus' GBX 49.6. The yield may seem appealing, but National Grid maintained its policy of dividend growth in line with inflation at the expense of a credit rating downgrade last March and resorts to a dilutive scrip scheme. Shares appear overvalued.