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Reasons to Add National Grid (NGG) to Portfolio Right Now
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National Grid’s (NGG - Free Report) ongoing systematic investments in critical infrastructure, acquisitions and the expansion of renewable operations will drive its performance in the long run.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a strong investment pick at the moment.
Growth Projection
The Zacks Consensus Estimate for 2022 earnings per share (EPS) of $4.14 indicates year-over-year growth of 16.6%.
The Zacks Consensus Estimate for 2023 EPS of $4.46 indicates year-over-year growth of 7.7%.
National Grid’s long-term (three to five years) earnings growth is projected at 7.5%.
Dividend
National Grid has a long history of dividend payments and has paid dividends to shareholders consecutively since 2002. National Grid’s current annual dividend is $2.29 per share.
Currently, NGG has a dividend yield of 3.1% compared with the Zacks S&P 500 composite's average of 1.45%.
Inorganic Growth
National Grid completed the acquisition of Western Power Distribution (WPD), the United Kingdom’s largest electricity distribution business, for $10.21 billion (£7.8 billion). It bought WPD as part of plans to pivot its focus toward electricity and greener energy along with increasing the company’s electrical assets from 60% to 70%. The acquisition includes a contribution of $336 million (£257 million) within the underlying operating profit and significant capital investments of $412 million (£315 million) in 2022.
Stable Investment & Emissions Reduction
National Grid is currently focused on upgrading electric and gas transmission infrastructure. NGG forecasts capital investments of $3,719 million (£2,840 million) in 2022, 22% more than the prior year, to enable energy transition across markets. Out of the total, the company plans to invest $769 million (£587 million), 17% higher than the first half of the last year, in the U.K. Electricity Transmission business on large scale projects, such as London Power Tunnels 2 and Hinkley-Seabank. It also plans to invest $226 million (£131 million), up 38% from the last year, in the Gas Transmission business, which is reported as a discontinued operation for asset health and emissions reduction.
National Grid Electricity Transmission announced plans that would reduce carbon emissions through a series of targeted steps. Its targets include a 34% reduction in emissions by 2026 and a 50% reduction by 2030 from the 2018 baseline and aims to achieve net-zero emissions by 2050.
Return on Equity
Return on Equity (ROE) indicates how efficiently a company is utilizing shareholders’ funds in the business to generate returns. At present, NGG’s ROE is 9.6%, higher than the industry average of 9.2%, which indicates that the company is utilizing the funds more effectively than industry peers.
Price Performance
In the past six months, National Grid has rallied 12.7% compared with the industry’s 1.5% growth.
The long-term earnings growth of Atmos Energy, Xcel Energy and PNM Resources is projected at 7.3%, 6.4% and 5%, respectively.
The Zacks Consensus Estimate for 2022 EPS of Atmos Energy, Xcel Energy and PNM Resources has moved up 7.6%, 7.4% and 6.7%, respectively, year over year.
In the past three months, ATO, XEL and PNM’s shares have surged 16.4%, 4.0% and 1.1%, respectively.
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Reasons to Add National Grid (NGG) to Portfolio Right Now
National Grid’s (NGG - Free Report) ongoing systematic investments in critical infrastructure, acquisitions and the expansion of renewable operations will drive its performance in the long run.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a strong investment pick at the moment.
Growth Projection
The Zacks Consensus Estimate for 2022 earnings per share (EPS) of $4.14 indicates year-over-year growth of 16.6%.
The Zacks Consensus Estimate for 2023 EPS of $4.46 indicates year-over-year growth of 7.7%.
National Grid’s long-term (three to five years) earnings growth is projected at 7.5%.
Dividend
National Grid has a long history of dividend payments and has paid dividends to shareholders consecutively since 2002. National Grid’s current annual dividend is $2.29 per share.
Currently, NGG has a dividend yield of 3.1% compared with the Zacks S&P 500 composite's average of 1.45%.
Inorganic Growth
National Grid completed the acquisition of Western Power Distribution (WPD), the United Kingdom’s largest electricity distribution business, for $10.21 billion (£7.8 billion). It bought WPD as part of plans to pivot its focus toward electricity and greener energy along with increasing the company’s electrical assets from 60% to 70%. The acquisition includes a contribution of $336 million (£257 million) within the underlying operating profit and significant capital investments of $412 million (£315 million) in 2022.
Stable Investment & Emissions Reduction
National Grid is currently focused on upgrading electric and gas transmission infrastructure. NGG forecasts capital investments of $3,719 million (£2,840 million) in 2022, 22% more than the prior year, to enable energy transition across markets. Out of the total, the company plans to invest $769 million (£587 million), 17% higher than the first half of the last year, in the U.K. Electricity Transmission business on large scale projects, such as London Power Tunnels 2 and Hinkley-Seabank. It also plans to invest $226 million (£131 million), up 38% from the last year, in the Gas Transmission business, which is reported as a discontinued operation for asset health and emissions reduction.
National Grid Electricity Transmission announced plans that would reduce carbon emissions through a series of targeted steps. Its targets include a 34% reduction in emissions by 2026 and a 50% reduction by 2030 from the 2018 baseline and aims to achieve net-zero emissions by 2050.
Return on Equity
Return on Equity (ROE) indicates how efficiently a company is utilizing shareholders’ funds in the business to generate returns. At present, NGG’s ROE is 9.6%, higher than the industry average of 9.2%, which indicates that the company is utilizing the funds more effectively than industry peers.
Price Performance
In the past six months, National Grid has rallied 12.7% compared with the industry’s 1.5% growth.
Image Source: Zacks Investment Research
Other Stocks to Consider
Some other similar-ranked stocks from the same industry include Atmos Energy Corp. (ATO - Free Report) , Xcel Energy Inc. (XEL - Free Report) and PNM Resources (PNM - Free Report) . You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term earnings growth of Atmos Energy, Xcel Energy and PNM Resources is projected at 7.3%, 6.4% and 5%, respectively.
The Zacks Consensus Estimate for 2022 EPS of Atmos Energy, Xcel Energy and PNM Resources has moved up 7.6%, 7.4% and 6.7%, respectively, year over year.
In the past three months, ATO, XEL and PNM’s shares have surged 16.4%, 4.0% and 1.1%, respectively.