What Should You Know About National Grid plc’s (LON:NG.) Growth?
The latest earnings announcement National Grid plc’s (LSE:NG.) released in September 2017 revealed that the business endured a minor headwind with earnings falling from £1,901.0M to £1,810.0M, a change of -4.79%. Below, I’ve laid out key growth figures on how market analysts predict National Grid’s earnings growth outlook over the next few years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in. Check out our latest analysis for National Grid
Analysts’ expectations for the upcoming year seems optimistic, with earnings expanding by a robust 22.38%. This growth seems to continue into the following year with rates reaching double digit 27.19% compared to today’s earnings, and finally hitting £2,230.4M by 2020.
While it’s helpful to be aware of the growth year by year relative to today’s level, it may be more beneficial analyzing the rate at which the company is rising or falling on average every year. The advantage of this method is that we can get a better picture of the direction of National Grid’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 4.88%. This means that, we can assume National Grid will grow its earnings by 4.88% every year for the next couple of years.
Next Steps:
For National Grid, I’ve compiled three relevant 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 NG. 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 NG. is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of NG.? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
