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Why Is NRG Energy (NRG) Up 11.2% Since the Last Earnings Report?

Zacks Equity Research

A month has gone by since the last earnings report for NRG Energy, Inc. NRG. Shares have added about 11.2% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

NRG Energy Posts Q4 Earnings, Reaffirms ’17 Guidance

NRG Energyreported earnings of $0.90 in the fourth quarter of 2016, as against the Zacks Consensus Estimate of a loss of $0.10. Reported earnings were also up 60.7% from the year-ago quarter figure of $0.56.

Revenues

NRG Energy's quarterly operating revenues of $2,819 million lagged the Zacks Consensus Estimate of $3,096 million by 9% and were down 9.1% from $3,102 million reported in the fourth quarter of 2015.

Full-year 2016 revenues were $12,351 million, missing the Zacks Consensus Estimate of $13,440 million by 8.1% and down 15.8% year over year.

Highlights of the Release

Total operating costs and expenses in the quarter declined 6.4% to $895 million from $956 million a year ago.

The company’s adjusted EBITDA was $492 million in the fourth quarter of 2016, down 15.5% from $582 million a year ago.

The company incurred interest expenses of $1,061 million in 2016, down 5.9% from $1,128 million a year ago.

Financial Condition

As of Dec 31, 2016, NRG Energy had cash and cash equivalents of $1,973 million, compared with $1,518 million as of Dec 31, 2015.

The company’s long-term debt and capital leases (excluding current portion) were $18,006 million as of Dec 31, 2016, compared with $18,983 million as of Dec 31, 2015.

In 2016, NRG Energy’s net cash from operating activities was $2,072 million, up 58.3% from $1,309 million in the prior-year period.

Capital expenditure in 2016 was $1,244 million, down 3% from $1,283 million in the year-ago period.

Guidance

For 2017, NRG Energy reiterated its adjusted EBITDA and free cash flow (before growth investments) guidance in a range of $2,700–$2,900 million and $800–$1,000 million, respectively.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates trended downward during the past month. There has been one revision lower for the current quarter.

NRG Energy, Inc. Price and Consensus

 

NRG Energy, Inc. Price and Consensus | NRG Energy, Inc. Quote

VGM Scores

At this time, NRG Energy's stock has an average Growth Score of 'C', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of' C'. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for value investors than growth investors.

Outlook

The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.


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