How might earnings at National Grid (LSE: NG.) change in the years to come?
It's always worth keeping an eye on the earnings forecasts for your favourite companies, especially if you use forward price-to-earnings (P/E) ratios to gauge when to buy and sell your shares.
You never know, if City brokers have been revising their projections of late, your investments may not be as cheap -- or expensive -- as you think!
Today I'm looking at the earnings per share (EPS) forecasts for National Grid (LSE: NG) (NYSE: NGG.US), the FTSE 100 (UKX) utility company. All my figures are courtesy of S&P Capital IQ.
The consensus for 2012 is for earnings per share of 51p, which puts the 708p shares on a forward P/E of 14.
The estimates also suggest earnings may rise to 55p per share for 2013 and then climb to 56p per share in 2014, before flattening off at 58p for three years after that.
The data from S&P Capital IQ also indicates National Grid’s revenues may rise around 3% a year for the next five years. Revenues could climb from around £14.3bn in 2012 to £16.6bn in 2017.
All told, the forecasts for National Grid are, at best, pedestrian with both revenues and earnings rising below the rate of inflation.
Whether these projections make National Grid a buy, a hold or a sell is, of course, up to you. To put the company's multiple into perspective, the FTSE 100 at 5,990 trades on a P/E of around 15.
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> David does not own any share mentioned in this article.