NG.: Dividend Outlook And Regulatory Outcomes Will Shape Returns Ahead

Analysts have modestly raised their price target on National Grid, reflecting a slightly higher fair value estimate of approximately $11.96 as they factor in stronger anticipated revenue growth, partially offset by a small compression in forecast profit margins and future valuation multiples.

Analyst Commentary

Bullish analysts view the modestly higher price target as a reflection of improving growth visibility for National Grid, particularly as regulated asset base expansion and inflation-linked mechanisms support more resilient top line progression.

At the same time, they note that the shares still trade at a discount to their assessment of long term intrinsic value, suggesting scope for further upside if execution stays on track and regulatory outcomes remain constructive.

Bullish Takeaways

• Bullish analysts highlight that stronger anticipated revenue growth, supported by ongoing network investment, can offset near term margin compression and still justify a higher fair value.
• They argue that the current valuation embeds conservative assumptions on allowed returns and regulatory risk, leaving room for multiple expansion if the policy backdrop stays stable.
• Improving visibility on capital deployment and project delivery is seen as reducing execution risk, which can support more confident long term cash flow forecasts.
• Some bullish analysts believe National Grid’s inflation protection and relatively predictable earnings profile compare favorably to broader utilities peers, warranting a tighter discount to sector averages.

Bearish Takeaways

• Bearish analysts caution that even with upgraded revenue expectations, rising operating costs and interest expense could limit earnings leverage and constrain upside to the new target.
• They remain wary that future regulatory settlements may pressure allowed returns, capping valuation multiples despite solid underlying asset growth.
• Concerns persist around execution risk on large scale capital programs, where delays or cost overruns could erode returns and weigh on investor confidence.
• Some bearish analysts argue that, after the recent rerating, the risk reward profile is more balanced, with limited room for disappointment on growth or policy outcomes without triggering downside.

What’s in the News

• Directors proposed an interim dividend of 16.35 pence per ordinary share, or $1.0657 per American Depositary Share, for the year ending 31 March 2026, payable on 13 January 2026 to shareholders on the register as of 21 November 2025 (Key Developments).
• Ex dividend dates for the 2025 to 2026 interim dividend were set for 20 November 2025 for ordinary shares and 21 November 2025 for ADRs (Key Developments).
• Earnings guidance for the six months ended 30 September 2025 indicates group performance is in line with expectations, with underlying EPS, as usual, expected to be weighted to the second half of the year (Key Developments).
• Operating profit in UK Electricity Transmission and UK Electricity Distribution is anticipated to be broadly evenly split across the year, while US regulated businesses are expected to see profits weighted to the second half, aided by fewer storms in New York and new electricity distribution rates in New England (Key Developments).
• National Grid Ventures is expected to deliver a roughly even weighting of profitability across the year (Key Developments).

Valuation Changes

• Fair Value Estimate has risen slightly from $11.93 to $11.96, reflecting a modestly higher assessed equity value.
• Discount Rate is unchanged at 7.07 percent, indicating a stable view of National Grid’s risk profile and required return.
• Revenue Growth has increased meaningfully from about 11.10 percent to roughly 12.80 percent, signalling stronger expected top line expansion.
• Net Profit Margin has fallen modestly from around 19.92 percent to about 19.24 percent, incorporating expectations of slightly higher cost pressures.
• Future P/E multiple has edged down marginally from approximately 15.34x to about 15.20x, implying a slightly more conservative valuation of future earnings.