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GuruFocus has detected 6 Warning Signs with National Grid PLC \$NGG.
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National Grid PLC (NYSE:NGG)
Intrinsic Value: Projected FCF
\$38.39 (As of Today)

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value: DCF (FCF Based), or Discounted Earnings Intrinsic Value: DCF (Earnings Based) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company. The details of how we calculate the intrinsic value of stocks are described in detail here.

As of today, National Grid PLC's projected FCF intrinsic value is \$38.39. The stock price of National Grid PLC is \$64.87. Therefore, National Grid PLC's Price to Intrinsic Value: Projected FCF Ratio of today is 0.0.

During the past 13 years, the highest Price to Intrinsic Value: Projected FCF Ratio of National Grid PLC was 2.85. The lowest was 0.00. And the median was 1.62.

Definition

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value: DCF (FCF Based), or Discounted Earnings Intrinsic Value: DCF (Earnings Based) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company.

The details of how we calculate the intrinsic value of stocks are described in detail here.

This method smooths out the free cash flow over the past 6-7 years, multiplies the results by a growth multiple, and adds a portion of total equity.

Value = ((Growth Multiple)*Free Cash Flow(6 year avg) + 0.8*Total Equity(most recent))/Shares Outstanding

In the case of negative total equity, the following formula is used (see the Total Equity section for the reason):

Value = ((Growth Multiple)*Free Cash Flow(6 year avg) + Total Equity(most recent)/0.8)/Shares Outstanding

Here National Grid PLC's FCF(6 year avg) is calculate as

National Grid PLC Annual Data

 201103 201203 201303 201403 201503 201603 total_freecashflow 2,785 1,389 544 1,488 2,577 2,479

Add all the adjusted EPS together and divide 6 will get National Grid PLC's FCF(6 year avg) = \$1,877.14.

National Grid PLC's Intrinsic Value: Projected FCF for today is calculated as

 Intrinsic Value = (Growth Multiple * Free Cash Flow(6 year avg) + Total Equity(Mar16) * 0.8) / Shares Outstanding = (9.52035159596 * 1877.14294754 + 19309.1168091 * 0.8) / 754.200 = 44.18

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Explanation

The growth multiple is capped between 8.35 and 17.74.

Total equity weighting is more art than science and it should always be revisited in more detail when researching a company. Weightings from 0% to 100% to more than 100% are possible. 80% was chosen as a happy medium after taking the above ideas into consideration. Learn more here.

National Grid PLC's Price to Intrinsic Value: Projected FCF Ratio for today is calculated as

 Price to Intrinsic Value: Projected FCF = Share Price / Intrinsic Value: Projected FCF = 64.87 / 44.1770807528 = 1.47

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

National Grid PLC Annual Data

 Mar07 Mar08 Mar09 Mar10 Mar11 Mar12 Mar13 Mar14 Mar15 Mar16 Projected FCF 58.63 71.18 41.08 44.04 44.32 33.68 32.00 39.97 40.41 43.13

National Grid PLC Semi-Annual Data

 Mar12 Sep12 Mar13 Sep13 Mar14 Sep14 Mar15 Sep15 Mar16 Sep16 Projected FCF 33.68 0.00 32.00 0.00 39.97 0.00 40.41 0.00 43.13 0.00
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