3/25/2023 0 Comments National grid stock![]() However, with its current gearing and debt profile, things are nonetheless looking attractive. The trends which I spoke of in my original article are still very much dictating this company's future. While the company has a recent impressive set of performances, the fact remains that large amounts of CapEx remain for the company in order to complete both its asset overhaul, retrofitting, and new projects. The company can be seen as a utility of the future, with a not-unappealing portfolio split between US and UK, and Electricity and Gas. It also expects to generate significant savings through its efficiency program. The company has a strong balance sheet, and given its status as a utility, shares the specifics of leverage and economics of any utility. With north of £812M in earnings for the Half-year period, the company had a very strong operational performance - but expects for 2022 to be higher at about 5-7% growth rate. Only the new York segment reported a negative YoY in terms of operating profits and this was primarily due to the continued impact of weather-related effects - around £34M for the quarter. ![]() ![]() There are also some US solar projects about to be brought online, around 200MW of it. NGG also remains invested in Natural Gas, with nearly £300M worth of investments in interconnections, the North Sea Link seeing an early commission, and the Viking Link completed as early as 2024. The company will remain invested in New York, as well as New England, and both of these segments performed very well, with hundreds of millions of investments already secured and the slow lifting of COVID-19 restrictions seeing heightened levels of investments as well as results. UK gas is still part of the company, but the sales process has been launched, and it will be reported as a discontinued operation from here on out. The company is investing large amounts of capital for its current distribution and transmission networks located in the UK, and report outperformance during the period, as well as long-term growth that the company considers "visible" from current results. Overall, the company's 5 segments performed very well. Keep in mind that the massive growth does come compared to some weaker comps. NGG has certainly made a good start on this and shows 66% underlying EPS growth and 52% growth in operating profit, as well as a 1.2% dividend bump. The company has moved to a new operating model, expects nearly £400M worth of efficiency gains over the next 3 years, and outperformance going forward. During the past 6-8 months, this company has reached some major milestones in its pipeline, including the WPD M&A, its sale of Rhode Island assets on track, and the sales process of UK gas transmission being launched. The half-year results came in a week ago or so. (Source: National Grid) National Grid - How has the company been doing? ![]() Still, there's a potential for investing and outperformance here at the right price - and I mean to show you that right price. ![]() (Source: Seeking Alpha, Article on National Grid) The fact is, while the company has moved the needle in terms of stock price since that article, it has clearly underperformed broader indices, making my "Neutral" stance correct at the time of writing the article. As I wrote in my original article on the company, National Grid ( NYSE: NGG) is a fundamentally appealing company with a very interesting sort of assets, though a history of volatility and a low valuation that makes investing at higher multiples an uninteresting proposal. ![]()
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