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Here's Why You Should Add NRG Energy (NRG) to Your Portfolio

Zacks Equity Research

NRG Energy, Inc.’s NRG cost-saving initiatives, service to wide variety of customers and share buyback strategy will support its long-term growth objectives.

Estimates for the company have been revised upward in the past 30 days, which reflects analysts’ optimism in the stock. The Zacks Consensus Estimate for 2019 and 2020 earnings has moved up 5% and 15.3% to $4.04 and $ 5.21 per share, respectively.

Let’s focus on the factors that make NRG Energy an attractive stock to invest in.

Zacks Rank & VGM Score

The stock carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

NRG Energy has an impressive VGM Score of A. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors. Back tested results show that stocks with a favorable VGM Score of A or B coupled with a bullish Zacks Rank are best investment options.

Long-Term Price Performance



Shares of the company have gained on a long-term basis. The stock has rallied 39.7% in the past 24 months compared with the industry’s growth of 5%.

Transformation Plan & Debt Reduction

NRG Energy has initiated the three-year Transformation Plan in July 2017. This plan is designed to boost earnings, increase cost savings and raise shareholders’ value. The company is on track to realize $590 million of cost savings as well as $135 million of margin enhancements in 2019. It is targeting margin enhancements of $215 million for 2020.

The company has completed $600-million debt reduction and achieved its targeted investment grade credit metrics. NRG Energy’s refinancing and debt-reduction activities in the second quarter of 2019 will generate more than $25-million annual interest savings.

Transition to Integrated Power Company

In the past few years, NRG Energy has made significant progress in its transformation to an integrated power company through focus on customers. It sells electricity to a wide variety of customers. The company also focuses on perfecting its integrated platform. In August 2019, it closed the acquisition of Stream Energy, which heightened the company’s national multi-brand retail leadership position and added 450,000 customers.

Other Stocks to Consider

Some other top-ranked stocks from the same industry are The AES Corporation AES , IDACORP, Inc IDA and Alliant Energy Corporation LNT . All three stocks hold a Zacks Rank #2.

Long-term earnings growth of AES Corporation, IDACORP and Alliant Energy is pegged at 8.49%, 3.80% and 5.50%, respectively.

The Zacks Consensus Estimate for 2019 earnings of AES Corporation, IDACORP and Alliant Energy inched up 0.7%, 0.2% and 0.4% to $ 1.34, $4.47, $2.25 in the past 60 days, respectively.

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Alliant Energy Corporation (LNT) : Free Stock Analysis Report
 
IDACORP, Inc. (IDA) : Free Stock Analysis Report
 
NRG Energy, Inc. (NRG) : Free Stock Analysis Report
 
The AES Corporation (AES) : Free Stock Analysis Report
 
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