National Grid Down to Strong Sell - Analyst Blog

Zacks Investment Research downgraded National Grid plc (NGG) to a Zacks Rank #5 (Strong sell) on Jul 5, 2013.

Why the Downgrade?

Shares of National Grid have dipped roughly 6.3% since the company reported its fiscal year 2013 (ended Mar 31 2013) results on May 16. Adjusted net earnings, in local currency, increased roughly 12% year over year on the back of 4% increase in revenue.

Talking of expenses/income, increase of 3% in operating costs, 4% decline in financial income and 20% increase in tax expense restricted bottom-line growth. To add to this peril, long-term borrowings at the end of 2013 represented a year-over-year increase of 20%. Net cash flow generated from operating activities dipped 11% year over year.

In the last 60 days, the Zacks Consensus Estimate for National Grid has gone down by 6.1% to $4.00 for fiscal year 2014 and declined 10.3% to $4.26 for fiscal year 2015. Also, we have an Earnings ESP (Read: Zacks Earnings ESP: A Better Method) of -1.0% and -2.1% for fiscal years 2014 and 2015, respectively.

Other Stocks to Consider

National Grid is is a well-renowned company engaged in transmission and distribution of electricity and gas to its residential, commercial, and industrial customers. The company currently has a $42.3 billion market capitalization.

Other stocks to watch out for in the industry are Companhia Paranaense de Energia (ELP) and Integrys Energy Group, Inc. (TEG), each with a Zacks Rank #1 (Strong Buy) while The AES Corporation (AES) with a Zacks Rank #2 (Buy).