London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Lending, apparently for stocks the Intrinsic Value formula is Earnings Per Share (EPS) x (1 + r) x P/E Ratio. Since the price is a variable affected by sentiment and earnings can be affected by one off items like goodwill impairment, depreciation, write down's, etc; And r, the expected earnings growth rate, is basically a guess, why would a stocks intrinsic value be something to be taken seriously? I'd rather form my own opinion on the direction of a company, not the opinion of an analyst who may have their own vested interest.
Here's a website that apparently calculates the intrinsic values of companies, for National Grid it returns an Intrinsic value of £13.59 and £2.93 for BT. If you were to take those figures seriously, National Grid has a potential upside of 54% and BT a potential upside of 125%, assuming you believe in such things.
https://www.alphaspread.com/intrinsic-value-calculator
Are you stalking me Jake? First you feel the need to comment about me on the BT forum and now again on here. You should stick to discussing the stocks and stop following me around, it's creepy.
LTI. What fleecy seems not to understand is NG is a monopoly, BT is not. Just talking his book otherwise why would he waste his time on here? Whatever turns him on I suppose.
Not answering got anyone Flec. Just wondering how you change all the words you write into an intrinsic value for a Business. Business are money generating machines - generating free cash for their owners, now and into the distant future - like a bond whose value is dependent on future cash flows discounted at the prevailing interest rate.
I think it is a good thing that NG refocuses the business on its core competences in power transmission, and if they need to sell parts of the businesses it owns to finance this, so be it.
Luckily for you LTI I just got ludicrously bored with this.
Flec
''They're selling assets because ''
They plan to sell businesses at sometime in the future to streamline the business to concentrate on transmission networks.
They're selling assets because they need the cash to help fund their plans, without damaging their credit rating, otherwise they wouldn't have needed to tap shareholders.
You're ludicrously wrong.
Flec
NG will continue with the issuance of senior debt and will maintain a good credit rating.
They plan to sell businesses at sometime in the future to streamline the business to concentrate on transmission networks.
I think enough is enough from you Flec
Your wrong LTI.
Flec
''clearly their debt is too high''
wrong again.
NG will continue with the issuance of senior debt and will maintain a good credit rating.
They plan to sell businesses at sometime in the future to streamline the business to concentrate on transmission networks.
NG has a "ludicrous" amount of debt
https://www.youtube.com/watch?v=ygE01sOhzz0
LTI clearly their debt is too high, or they wouldn't tap shareholder's with a rights issue and they wouldn't sell assets to fund their plans, clearly they have to watch their debt position to protect their credit rating; As far as I'm concerned, excuses like "they plan to sell businesses to streamline the business to concentrate on transmission networks", are just spin, even your Black and white thought processes must be capable of understanding that? Clearly they're getting close to their overdraft limit and are having to find other ways to raise cash, I'm just amazed that analysts aren't hitting with a Vodafone like narrative suggesting the dividend is unaffordable at the current level, maybe they'll hit them with that one further down the road.
Flec
''is disposing of assets because it's current debt position is too high''
wrong again - they plan to sell businesses to streamline the business to concentrate on transmission networks.
''There's no guarantee that NG's £60bn worth of capex will significantly grow revenue''
wrong again - the more electricity that passes through NG's network the higher the revenue. Electricity generation is expected to explode in the coming years.
''All I'm saying is that BT is no riskier an investment''
This is a National Grid board - I am sure that anyone on here is quite capable to make up their own mind about BT.
So you come on here de ramping NG where you have not invested a single penny, and at the same time giving BT as an alternative investment - a stock that you have invested a lot of money in and are underwater.
People quite rightly would question your motives for being here wouldn't they.
Comparing BT and NG is completely ludicrous - any sensible investor would know that
Just to add, Lending why are you answering for LTI? He was the one that said comparing the two companies is "ludicrous"
BT and NG share a lot of the same features, although in different sectors:
They're both heavily regulated
They're both wholesale providers, NG with its Energy supply customers and BT through Openreach providing infrastructure services to other Communication Providers
They both have Capex demands and debt
They both generate around the same revenue and EBITDA
They both pay dividends, BT reduced there's post covid but BT hasn't had a rights issue recently either.
Going off the recent results, BT has now reached peak capex whereas NG have just announced a further £60 Billion capex over the next 5 years. BT has competition, but they're in the midst of a big building closure program, PSTN switch off and convergence play that'll add hugely to the bottom line between now and 2030; NG has just diluted it's stock and is disposing of assets because it's current debt position is too high, clearly BT is a safer bet than NG from that point of view.
There's no guarantee that NG's £60bn worth of capex will significantly grow revenue, just like there's no guarantee that BT wont face stiff competition going forward, whichever stock you bet on it's speculative. What is clear is that the market players decided to trash sentiment in Telecom stocks, probably to allow private equity to swoop in and pick off infrastructure assets, like KKR buying Telecom Italia's fixed line network, or Vodafone selling Vantage towers. NG is also selling off various assets to fund it's Electricity Grid bet, which may lead to growth in revenue, but the regulators could easily crimp that dependent on the general economy and end customer's ability to pay their energy suppliers.
I could go on about the efficiency of Passive optical networks and how BT's energy bill will fall through the floor once FTTP is complete; I could also say that AI chip designs may become more power efficient, as chip manufacture moves from 3nm to 2nm and the designs get more ever power efficient over time. It isn't written in stone that businesses will require more power in years to come, that's just speculation based on current technology and unknowns.
All I'm saying is that BT is no riskier an investment than National Grid, but the market treats them very differently from a sentiment and valuation point of view.
Given that NG is heavily regulated in both the UK and USA, what are the risks of a labour government in the UK and ? regime in the USA adversely affecting the short/medium term prospects of NG?
I expect the dividend hunters to be active next week as the price recovery continues.
Fleccy “Comparing one with the other, NG is either massively overvalued or BT is massively undervalued. ‘
I’m not sure I understand the logic of your reasoning. I’m curious to know how you determine the intrinsic value of a business to be able to make a statement like the above. Surely CAPEX and debt levels alone are insufficient? And how do you differentiate between CAPEX needed to maintain the business and CAPEX used to grow the business and generate future returns?
Nil paid rights currently up 26% today -just to counteract someone mentioning the price on the way down.
" the expected big increase in electricity consumption because of things like increased use of EV's and artificial Intelligence etc."
etc ....being air conditioners and water pumps !! depending how the climate change affects you !!
Talk
''leading the way with a greater focus on renewables''
??
That would be the generators of electricity.
NG will greatly benefit from this renewable energy waiting to be plugged into the Grid to accommodate the expected big increase in electricity consumption because of things like increased use of EV's (I am not personally interested) and artificial Intelligence etc.
LTI, why is comparing BT and NG completely ludicrous?
Even though one is a Telecom company and the other a power grid owner, I can think of many qualities they share as companies, albeit in their respective industries.
It can still have dips, but I've gotta be honest, it's looking like I'm glad I loaded the boat at just under £8.35
Unlucky to the dreamers and bargain hunters who held on salivating at the thought of an under £8 SP, you missed a great opportunity in the £8.30/8.40 range. Looking forward to receiving my 39p upcoming divi and this returning to over £10 in the coming months and the company leading the way with a greater focus on renewables