Morgan Stanley has named National Grid its top pick for 2027 among Europe's major energy companies.

Morgan Stanley has named National Grid, the British electricity transmission network operator, as the company with the highest investment priority among Europe's six largest utility companies through 2027. According to the bank's forecast, the sector will continue to outperform the broader stock market going forward, driven by quality growth opportunities in energy infrastructure.

In the bank's ranking, National Grid is followed by RWE, Engie, Iberdrola, E.ON, and Italy's Enel. Morgan Stanley is least optimistic about the latter. The bank also gave preference to larger companies within the sector.

National Grid's Investments Are Growing

National Grid's financial indicators point to increasing infrastructure investment. According to Barclays data, the company's capital expenditure reached £11.58 billion in fiscal year 2026, a 21.3% increase compared to the previous year. Operating profit reached £5.68 billion.

Nevertheless, significant risks for the company remain, including fundraising challenges, the regulatory environment, and political uncertainty in the UK.

Financial Indicators of Europe's Major Energy Companies

In Morgan Stanley's assessment, the financial standing and investment characteristics of the remaining five companies also vary.

RWE trades at the lowest earnings multiple among the six companies, with a P/E ratio of 12.9. At the same time, the company's share price has risen 35.06% over the past year, reaching €58.73.

Engie offers investors the highest dividend yield among the six — 5.5%. According to UBS, the company plans to allocate €34-38 billion for growth-oriented investments between 2026 and 2028.

Iberdrola has the highest P/E ratio among the six companies, at 28.1. Its shares have gained 30.64% over the past year. In the first half of 2026, the company's adjusted EBITDA grew 7%, while its network business EBITDA rose 13%.

In E.ON's case, attention is drawn to the company's debt level and financial results. Its debt stands at 201.6% of equity. In the last quarter, the company missed analysts' earnings per share (EPS) forecast by 26.67%. Its financial results are scheduled to be released before market trading begins on November 11.

Enel's dividend yield stands at 5%, while its debt equals 210.4% of equity. In addition, analysts' EPS forecasts for the company have been revised down by 6.34% over the past 30 and 60 days.

Energy Infrastructure Amid AI Sector Growth

Morgan Stanley's optimistic assessment is linked to structural shifts in the energy sector. Rising electricity demand, intensifying energy security concerns, and the electrification of the economy are increasing the need to expand grid infrastructure.

The development of artificial intelligence is cited as an additional factor. Data centers and AI systems require substantial amounts of electricity, creating long-term investment opportunities for energy infrastructure companies.

However, when assessing the sector's outlook, investors still need to pay close attention to companies' debt levels, their ability to finance capital expenditures, and regulatory risks. It is precisely these factors that account for the differences in the investment profiles of Europe's largest energy companies.