National Grid Share Price Forecast August 2021 – Time to Buy NG?

Shares of London-based multinational electricity and gas utility company National Grid (LSE: NG) are in the green today, trading around the 973p mark at the time of writing. Many investors consider the company’s shares as one of the best in the FTSE 100 shares. But with the current valuation, are NG shares worth buying?

National Grid – Technical Analysis

According to the financial statement released by National Grid, the market cap of the company is at £35.04 billion with total assets worth £67.216 billion. Revenue for National Grid was at £14.78 billion with a profit margin of 11.10%, compared to revenue of £14.54 billion the year before.

National Grid’s oscillators such as Relative Strength Index (14)(75.1), Stochastic %K (14, 3, 3)(95.1),  Commodity Channel Index (20)(157.8), Average Directional Index (14)(17.7) and Awesome Oscillator(24.4) are pointing towards a neutral action. On the other hand, most of National Grid’s moving averages are indicating a strong buy action, as evident by Exponential Moving Average (100)(922.6), Simple Moving Average (100)(923.7), Exponential Moving Average (200)(910.4) and Simple Moving Average (200)(897.5).

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Recent Developments

National Grid provides electricity and gas to the United Kingdom-based consumers with some added operations in the United States. With a current dividend yield of 5.11%, the company ticks the conditions regarding the sustainability of dividends. Apart from dividends, National Grid hasn’t performed badly as indicated by an increase of 12% in 2021. It also performed well during the pandemic downturn, where it managed to increase by 13% over the past 2 years. Even though in some periods it hasn’t done well, NG shares have comfortably kept ahead.

When looking at the company’s dividend yield in excess of 5%,  it’s evident that National Grid has been steadily progressing for years. While so many firms struggled financially with their payments, National Grid’s amazing business model came to its aid. The company’s outlook on the whole UK stock market is one of the clearest as it operations in the country’s energy distribution network. The company has a good view of the likely distribution of revenue, expenditure and volumes for every year. However, investors must bear in mind that the company operates in a highly regulated market where the government gets to dictate the terms of what a company can and cannot do with its shareholder’s funds.

Should You Buy NG Shares?

National Grid is expected to perform well going forward, regardless of the current economic landscape. It only experienced a 3% decline in operating profit due to the pandemic during the last financial year. This was caused by operational issues, rather than lower demand from customers. Additionally, the company’s push towards clean energy bodes well for the future. National Grid has committed to invest a total of £30 to £35 billion towards the cause by 2020. This will make investors interested in such causes to buy the shares, irrespective of their dividend.

However, investors also must consider some risks, particularly the proposed measures by the Government to replace National Grid with an independent energy firm for being the energy systems operator. While the company does have a conflict of interest in this regard, the proposed measures are expected to have a damaging impact on its share valuations. The uncertain economic outlook may force energy bills to become high profile. The government may cap National Grid’s profits along with the providers themselves. But these risks are largely offset by the dividend outlook of the company. Thus investors can look to add NG shares to their portfolio for the time being.

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