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National Grid PLC ADR NGG

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Morningstar’s Analysis

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National Grid Tops Its Expectations for Fiscal 2021; Shares Rich

Tancrede Fulop, CFA Senior Equity Analyst

Analyst Note

| Tancrede Fulop, CFA |

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.

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Company Profile

Business Description

National Grid owns and operates the electric and gas transmission system in England and Wales. In 2019, it divested its U.K. natural gas distribution business. In the Northeastern United States, it serves 7.1 million electricity and gas customers combined in three states. It also owns regulated transmission and electricity generation in the United States, metering services, merchant transmission lines in the U.K., and the Grain (U.K.) liquefied natural gas facility.

1-3 Strand
London, WC2N 5EH, United Kingdom
T +44 2070043000
Sector Utilities
Industry Utilities - Regulated Electric
Most Recent Earnings Mar 31, 2008
Fiscal Year End Mar 31, 2022
Stock Type
Employees 23,683