National Grid PLC Rated 62% by Growth Investor Model

National Grid PLC gains a 62% score in the Growth Investor model, highlighting its potential in the Electric Utilities sector. However, despite passing several criteria, it shows weaknesses in sales growth and earnings persistence.

Date: 08-02-2025

AI Rating: 5

Performance Overview: National Grid PLC (NGG) has received a rating of 62% based on its fundamentals according to the Growth Investor model, indicating moderate interest. A score above 80% typically signals stronger interest levels.

While the stock passes several important criteria including P/E ratio, revenue growth relative to EPS growth, and current quarter earnings, it fails on key aspects such as sales growth rate, earnings growth rate for the last several quarters, and earnings persistence. This duality reflects both strengths and weaknesses in the company's financial health, suggesting that while revenue composition is beneficial, overall growth is stalling.

Revenue Growth: The report indicates that revenue growth is passing in relation to the EPS growth, but the sales growth rate has failed to meet the expectations set by the Growth Investor model. This could lead to concern among investors about the company’s capacity to generate consistent sales increases, which is vital for driving future earnings.

Earnings Per Share (EPS): The current quarter’s EPS growth is positive, and it exceeds the historical growth rate. However, the growth over the past several quarters has not shown durability, leading to a failed assessment in earnings persistence and long-term EPS growth. This raises questions on sustainability and future profitability expansions that investors must carefully evaluate.

Investor Sentiment: The passing grades on key measures, such as the P/E ratio and total debt/equity ratio, suggest some financial stability and reassure investors regarding leverage. Moreover, the positive performance of insider transactions indicates a level of confidence from insiders about the future of the company, which could mitigate risk perceptions.

Overall, while National Grid PLC demonstrates some favorable investment traits such as a decent EPS growth trajectory for the current quarter and a sound balance sheet, significant challenges remain in its sales growth and earnings persistence profiles that could alter its attractiveness to potential investors.

Stocks: NGG