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National Grid’s share price surged to its highest level since September 23rd, driven by the company’s strong financial results. The stock climbed to 1,018p, marking a more than 20% increase from its lowest point this year. Similarly, Centrica’s share price has also seen a double-digit recovery in recent days.
The sharp rise in National Grid’s stock price reflects improved business conditions. The company reported a significant increase in operating profit, which rose from £1.48 billion in the first half of 2021 to over £2.2 billion. Pre-tax profits also jumped to £1.57 billion, and the dividend per share was increased to 17.84p. This growth was largely driven by the strong performance of its UK Electricity Distribution segment.
National Grid also ramped up its capital investments, reaching £3.9 billion, which included about 2.5 months of UK Electricity Distribution ownership. The firm committed approximately £40 billion to capital investments in the UK and achieved savings of around £85 million. The company’s CEO highlighted that these cost efficiencies, totaling £225 million to date, are helping to mitigate inflationary pressures on both the business and its customers. Additionally, National Grid has announced funding to support its most vulnerable customers and communities through this winter and the next.
National Grid remains a favored investment for several reasons: it holds a strong market share in the UK energy sector, offers an attractive dividend yield of 5.06%, and has significant exposure to the U.S. market, providing power to New England and New York. While its UK business has been somewhat tepid, the company has benefited from the weaker pound.
The daily chart shows that National Grid’s stock price has performed well in recent weeks, recovering from a year-to-date low of 845p to 1,020p, a key level since it was the lowest point on June 22. The stock has moved above the 25-day and 50-day moving averages, and the Stochastic Oscillator indicates overbought conditions. This suggests that the shares may continue to rise, with buyers potentially targeting the key resistance level at 1,100p. However, a drop below 1,000p would challenge this bullish outlook.