U.S. Markets open in 7 hrs 2 mins

What Should We Expect From National Grid plc's (LON:NG.) Earnings In The Year Ahead?

Simply Wall St

After National Grid plc's (LON:NG.) earnings announcement in March 2019, analyst consensus outlook appear cautiously optimistic, with earnings expected to grow by 32% in the upcoming year compared with the past 5-year average growth rate of 5.1%. With trailing-twelve-month net income at current levels of UK£1.5b, we should see this rise to UK£2.0b in 2020. Below is a brief commentary on the longer term outlook the market has for National Grid. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

See our latest analysis for National Grid

How is National Grid going to perform in the near future?

The longer term view from the 17 analysts covering NG. is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To get an idea of the overall earnings growth trend for NG., I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

LSE:NG. Past and Future Earnings, August 3rd 2019

This results in an annual growth rate of 5.5% based on the most recent earnings level of UK£1.5b to the final forecast of UK£2.1b by 2022. EPS reaches £0.58 in the final year of forecast compared to the current £0.44 EPS today. In 2022, NG.'s profit margin will have expanded from 10% to 13%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For National Grid, there are three essential aspects you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is National Grid worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether National Grid is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of National Grid? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.