National Grid PLC (LSE:NG.) isn’t the sort of stock to set pulses racing. It is the quiet hum behind the plug socket, dull until it stops working. Yet its half-year results offered just enough spark to keep investors interested.
The company reported earnings per share of 29.8p for the six months to September, a 6% beat against City forecasts. Jefferies calls it a “positive update”, and for once that doesn’t sound like broker-speak.
The outperformance came mainly from the US-regulated business, where higher allowed returns are feeding through, and from its Ventures arm, which includes interconnectors and other assets that tend to surprise on the upside.
Group operating profit of £2.3 billion was about 2% ahead of expectations. There were mixed results by division: electricity transmission was steady, distribution was a touch weak, but America carried the load.
It is a familiar story, as the transatlantic grid now accounts for around half of earnings and often does the heavy lifting when the UK side looks sluggish.
For the full year, management is sticking with guidance of 6 to 8% earnings growth, despite currency headwinds and a slightly higher share count.
Strip out those quirks and the underlying performance looks stronger than expected. Jefferies reckons that means consensus forecasts of 77.1p of earnings for the year to March may need nudging up.
Debt remains a live wire. Net borrowings are expected to rise by about £1.5 billion by year-end, even before asset sales. Those include the planned disposals of National Grid Renewables in the US and the Grain liquefied natural gas terminal in Kent, which should help to rebalance the books.
Still, leverage is the inevitable companion of a company whose job is to build infrastructure faster than the regulators allow it to recover the cost.
The bigger picture is reassuringly prosaic. National Grid expects asset growth of roughly 11% this year, once disposals are stripped out, proof that the energy transition is still feeding a steady diet of investment projects. The dividend, which remains the main attraction here, is comfortably covered.
The shares, at about 1,150p, yield just over 5%, and Jefferies’ price target of 1,260p implies a modest 9% upside. That may not light up the room, but for investors looking for something solid in an uncertain market, National Grid continues to deliver a reliable current.