Is national grid a good long term investment

National Grid appears to be a solid long-term investment, considering its competitive advantages, growth prospects, and financial stability. Here's a detailed analysis:

1. Competitive Advantages:
   • National Grid operates in the Multi-Utilities industry, which provides essential services, ensuring its relevance in the energy sector.
   • The company has a history of share price growth, outperforming the market average, indicating strong investor confidence.
2. Growth Prospects:
   • The company is investing heavily in strengthening the UK and US electricity networks, with a £7 billion rights issue to fund a £60 billion investment plan over five years.
   • The industry is preparing for significant growth, with electricity demand expected to triple in the US within the next couple of decades, offering a favorable market environment.
3. Financial Stability:
   • National Grid has a P/E ratio of 21.54, which is relatively high, suggesting that investors are willing to pay a premium for the stock.
   • The company's projected fair value is £11.30 based on the Dividend Discount Model, indicating potential upside from the current share price.
4. Dividend and Shareholder Returns:
   • National Grid has a history of increasing dividends, which can be attractive for income-focused investors.
   • The total shareholder return (TSR) over the last five years has been 64%, exceeding the share price return, reflecting the value of dividends.
5. Market Sentiment and Challenges:
   • Despite recent challenges, including a drop in earnings per share and a decrease in ROE compared to peers, the company's strategic investments and the growing demand for electricity suggest resilience.
   • The company's technical analysis indicates a bearish outlook in the short term, but the long-term growth prospects could offset these concerns.

In conclusion, National Grid's strategic investments, strong shareholder returns, and favorable industry trends suggest it could be a good long-term investment. However, investors should monitor the company's earnings and the impact of industry changes on its financial performance.