National Grid Shares (LON: NG) Rally on Profit Surge, EPS Beat

National Grid shares (LON:NG.) are trading strongly today, up 3.69% after releasing an impressive set of full-year financial results for the fiscal year ending March 31, 2025.

Underlying operating profit surged 20% year-on-year to £5.36 billion, comfortably beating consensus forecasts and underscoring the strength of its regulated UK and US businesses. Yet, statutory operating profit came in lower at £4.93 billion, impacted by a £303 million impairment tied to the paused Community Offshore Wind project in New York. Revenue slipped 7% to £18.38 billion, a function of lower wholesale prices and regulatory adjustments rather than operational weakness.

Earnings per share (EPS) for the year reached 73.3p, slightly ahead of analyst expectations. The board declared a final dividend of 30.88p, bringing the full-year payout to 46.72p per share. While this represents a 20% reduction from the previous year, it’s important to note the dividend has been rebased following the 2024 rights issue; on a comparable basis, shareholders actually saw a 3% increase. With a current yield of 5.5%, National Grid remains a mainstay for income-focused investors, offering a payout well above the FTSE 100 average.

The highlight of National Grid’s outlook is its record £60 billion capital investment program, with £9.85 billion deployed in FY 2025 alone, a 20% increase year-over-year.

This has driven a 10% increase in the company’s regulated asset value, now at £67.5 billion. Management has reiterated guidance for 6–8% annual EPS growth through 2029, supported by regulatory rate increases and cost efficiencies. The company’s long-term vision is closely aligned with the UK’s net-zero ambitions and the global energy transition, positioning it as a key enabler of decarbonization and grid modernization.

Notwithstanding its operational strengths, National Grid faces a complex regulatory and political environment. The impairment in New York highlights the risks associated with shifting US energy policy, particularly under a less supportive federal administration. With nearly 40% of its assets in the US, the company is exposed to cross-border regulatory uncertainties. In the UK, the RIIO-T3 framework provides more predictable returns, but any changes in regulatory allowances or delays in project approvals could impact earnings.

Debt sustainability is another focal point. National Grid’s regulatory gearing stands at 61%, and its net debt has climbed to £38.5 billion. Rising interest rates and the need to refinance large sums over the coming years introduce additional risk, although the company’s defensive business model and regulated cash flows offer some mitigation.

Markets clearly liked the print. Today's move has pushed National Grid's share price up to a 9.64% YTD gain, a significant outperformance on the Footsie's 4.24% over the same period.