National Grid Is A Buy

National Grid Is A Buy by Andrew Blumer last updated on February 05, 2025

National Grid (Ng) Is A Buy After 14% Drop?

National Grid stock has dropped significantly from its high (Sep), a sign that the stock is under the grasp of bears. This has also raised the question: Is the National Grid (NG) a buy now that it is available at a bargain.

The National Grid shares made a high at 10.6 during September. Since then, NG has been down by around 14% which has also presented possible opportunities for the investors.

National Grid P/E Ratio Is 26.6

Right now, the P/E ratio of National Grid is 26.6. When we look at other similar stocks, the average ratio is around 12.6. So, based on the P/E ratio, the National Grid looks overpriced. Also, the Price/Sales ratio of the National Grid is 2.4, higher than the 0.9 average.

According to several analysts, the earnings of National Grid will grow by 16.1%/year till 2027. This is good news and shows the company's stock price & its dividend can keep getting higher.

Also, the last H1 results of National Grid were solid and showed a 14% y/y increase in the underlying profit. Experts believe that the profit was due to the increased revenues from the electricity transmission business.

The company also earned more profit due to higher rates in the Massachusetts and New York areas. In these regions, the company has 20+ million customers.

But there's yet another downside to the National Grid stock - The firm has high infrastructure spending that's directed by the government. The debt-to-EBITDA of the National Grid is 5.9, while anything above 3 is considered bad.

The bottom line is that its not a good idea to buy the National Grid (NG) shares as of now. But it's worth watching as any more discounts in share prices or some positive news could make it a good stock to own.

But as things stand right now, the National Grid stock is not a buy by any chance when there are better options out there.