The UK-based transmission and energy distributor (LON: NG) has seen a rollercoaster ride. The world-famous investor Warren Buffet has stated that there will always be discrepancies between price and value in the marketplace. In case of NG, Buffet’s statement stands as the 5-year absolute return is beating the market despite declining EPS.
What could be the reason for the uptrend in NG stock price
One way to determine how the market perceives a stock is to compare the earnings per share (EPS) change with the share price movement. In the past five years, the NG stock price has grown while its EPS has dropped by 6.4% Year on year (YOY)
This substantial drop in EPS indicates that marketplace participants are not valuing the stock price on its financials, like the EPS and related profitability ratios. Therefore, it is well worth searching different metrics to determine why the stock price is in a bullish trend despite the falling EPS. One good sign is that the organization’s dividend is better than before, which some buyers may find attractive. The enterprise’s annual sales boom has also been steady at approximately 7.4% Yearly (YOY).
Technical analysis and prediction of NG stock price
In a close to medium range, the stock has seen a consolidated trend for a year. In October 2022, the NG stock in the FTSE 100 went on an uptrend with the index. This uptrend lasted until May after the NG stock price broke some significant resistance levels.
As of this writing, the NG stock price is trading near its immediate support level of £942. The trend is slightly bearish, while the stock price will likely deviate below the support level. It may happen because no bullish candles are seen rejecting the sudden bearish trend once the stock rebounded from its resistance level of £1016
However, the Relative Strength Index (RSI) levels are already at their oversold level of 30. That means the bears might face strong rejection as they push beyond this level. It takes us to the prediction, which will be bullish until the NG stock price reaches its immediate resistance of £1016 or its trendline.
Conclusion
The National Grid (LON: NG) stock price has given more than 55% return in 5 years while its EPS has declined by 6.4% year on year in the same period. The current momentum in the short term is bearish while the stock is on its support level. The price prediction will be bullish from here.
Technical Levels
Support: £942, and £885
Resistance: £1016, and £1077
Disclaimer
The views and opinions stated by the author, or any people named in this article, are for informational purposes only. They do not establish financial, investment, or other advice. Investing in or trading crypto assets comes with a risk of financial loss.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2023/10/03/ng-stock-price-uptrend-despite-declining-eps-whats-the-reason/