U.S. markets closed
  • S&P 500

    3,666.72
    -2.29 (-0.06%)
     
  • Dow 30

    29,969.52
    +85.73 (+0.29%)
     
  • Nasdaq

    12,377.18
    +27.82 (+0.23%)
     
  • Russell 2000

    1,848.70
    +10.67 (+0.58%)
     
  • Crude Oil

    45.64
    +0.36 (+0.80%)
     
  • Gold

    1,844.80
    +3.70 (+0.20%)
     
  • Silver

    24.19
    +0.05 (+0.22%)
     
  • EUR/USD

    1.2149
    +0.0034 (+0.28%)
     
  • 10-Yr Bond

    0.9200
    -0.0280 (-2.95%)
     
  • GBP/USD

    1.3453
    +0.0077 (+0.57%)
     
  • USD/JPY

    103.8600
    -0.5640 (-0.54%)
     
  • BTC-USD

    19,444.12
    +495.22 (+2.61%)
     
  • CMC Crypto 200

    382.14
    +7.73 (+2.07%)
     
  • FTSE 100

    6,490.27
    +26.88 (+0.42%)
     
  • Nikkei 225

    26,809.37
    +8.39 (+0.03%)
     

Why You Should Add NRG Energy (NRG) to Your Portfolio Now

Zacks Equity Research
·3 min read

NRG Energy, Inc.’s NRG execution of Transformation Plan, systematic capital expenditures and efforts to provide clean energy will support its long-term growth objectives. Also, its healthy liquidity position allows it to meet its near-term obligations.

Let’s focus on the factors that make this Utility - Electric Power company an attractive investment option.

Zacks Rank & Price Performance

NRG Energy holds a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of the company have increased 3.8% in the past six months against the industry’s decline of 2.4%.

VGM Score

NRG Energy has an impressive VGM Score of B. Our research shows that stocks with a Style Score of A or B when combined with a Zacks Rank of 1 or 2 offer the best upside potential.

Earnings Growth Projection

The Zacks Consensus Estimate for 2020 earnings is pegged at $5.45 per share, suggesting a 37.63% increase from the year-ago reported figure. The Zacks Consensus Estimate for 2021 earnings stands at $7.03 per share, implying a 28.93% rise from the prior-year reported number.

Moreover, the long-term (three-five years) earnings growth rate is pegged at 41.66%.

Transformation Plan

NRG Energy initiated its three-year Transformation Plan in July 2017. This plan is designed to strengthen earnings, increase cost savings and boost shareholder value. The plan is on track for a $215-million worth cumulative EBITDA-accretive margin enhancement, which includes $80 million in 2020. In the first half, the company’s capital expenditure was $116 million. Estimated capital expenditures for the rest of 2020 are $163 million.

Initiatives to Lower Emissions

NRG Energy is focusing on generation of clear energy to lower its toxic emission levels. On Sep 24, 2019, it announced the goals set for its GHG emission reductionand under this plan, the company aimed to achieve a 50% cut by 2025 and reach net-zero emissions by 2050 from the 2014 baseline.

Other electric utilities are also making efforts to supply clean and reliable energy to its customers. Some of the companies, namely Duke Energy DUK, DTE Energy DTE and Xcel Energy Inc. XEL are planning to provide absolute clean energy by 2050.

Liquidity

As of Jun 30, 2020, NRG Energy had liquidity worth $2.2 billion, up from $2.1 billion as of Dec 31, 2019. The company’s times interest earned ratio has also been improving over the years. It came in at 3.73 at the end of the second quarter, up from 3.10 sequentially. This improvement indicates that the company will be able to meet its near-term debt obligations without much difficulty. 

Efforts to Enhance Shareholder Value

In the first quarter of 2020, NRG Energy increased its annual dividend rate to $1.20 per share from 12 cents. It expects to achieve an annual dividend growth rate of 7-9% per share over the long term, subject to the board of directors’ approval. Currently, the dividend yield of the company is pegged at 4.07%, higher than its industry 3.70%.

Also, it is rewarding its shareholders via share buybacks. Through Aug 6, the utility completed $228 million of share repurchases. Notably, it does not intend to buyback any more shares in the remainder of 2020.

Just Released: Zacks’ 7 Best Stocks for Today

Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.3% per year.

These 7 were selected because of their superior potential for immediate breakout.

See these time-sensitive tickers now >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Xcel Energy Inc. (XEL) : Free Stock Analysis Report
 
DTE Energy Company (DTE) : Free Stock Analysis Report
 
Duke Energy Corporation (DUK) : Free Stock Analysis Report
 
NRG Energy, Inc. (NRG) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research