Looking at NRG Energy, Inc.’s (NYSE:NRG) earnings update on 31 December 2018, analysts seem extremely confident, with a bottom line expansion of more than 100% in the upcoming year, against the historical 5-year average growth rate of -4.6%. Currently with trailing-twelve-month earnings of US$460m, we can expect this to reach US$1.0b by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
Exciting times ahead?
The view from 7 analysts over the next three years is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To understand the overall trajectory of NRG’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
By 2022, NRG’s earnings should reach US$927m, from current levels of US$460m, resulting in an annual growth rate of 14%. This leads to an EPS of $4.17 in the final year of projections relative to the current EPS of $1.51. With a current profit margin of 4.9%, this movement will result in a margin of 9.1% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For NRG Energy, I’ve compiled three important factors you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is NRG Energy worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether NRG Energy is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of NRG Energy? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.