NGGNational Grid plc
Is the business good?
The checks split: nothing decisive, though earnings fully cash-backed (1.8×).
Operating profit is fully backed by cash. Conversion is worsening vs a year ago.
Positive operating leverage, operating profit is growing faster than sales, so margins widen as the business scales.
Margin-driven, fat margins on slower asset turns. ROE 8% = margin × turnover × leverage.
Unless marked, from derived.
Where this answer is blind. The F-score rewards improvement, so an already-elite company can score mid-pack.
How good a business is NGG?
National Grid plc earns 5.0% on the capital it employs against a 9.0% cost of capital, so growth costs more than it returns.
Return on invested capital · cost of capital 9.0% · 4.0 points below what the capital costs: growth destroys value
- Operating margin
- 27%
Operating margin · Utilities - Regulated Electric median 22% · fiscal year to FY2025
- Cash conversion
- 1.83×
Cash conversion · 2.24× a year ago · operating cash flow covers the operating profit after tax
- Share count, year on year
- +18%
Share count, year on year · shareholders own a smaller slice than a year ago
| Year | Operating margin |
|---|---|
| FY2020 | 17% |
| FY2021 | 18% |
| FY2022 | 24% |
| FY2023 | 23% |
| FY2024 | 23% |
| FY2025 | 27% |
Details›
- Gross marginfiscal year to FY2025
- 97%
- Operating marginfiscal year to FY2025
- 27%
- Net marginfiscal year to FY2025
- 16%
- Free cash flow margin
- −9.7%
- R&D as % of revenue
- 0.23%
- Revenue, trailing twelve months
- $18.4B
- Free cash flow, trailing twelve months
- −$1.79B
- Net income, trailing twelve months
- $2.90B
- Return on invested capitaloperating profit after tax ÷ debt + equity − cash
- 5.0%
Margins, capital and share counts from the statements as filed with the SEC; cash conversion is operating cash flow over operating profit after tax.
Utilities, Regulated Electric
Ranks #10 of 15 by RyuScore