NRG Energy, Inc. NRG continues to expand its operations through organic and inorganic initiatives. The company’s diverse customer base and long-term customer retention strategy should further boost its performance.
However, this Zacks Rank #3 (Hold) company faces risks related to disruptions in its fuel delivery system.
Tailwinds Favoring NRG
NRG Energy has been expanding its operations through strategic acquisitions. The acquisitions of Direct Energy and Vivint Smart Home have expanded the company's operations. Contributions from the acquired assets are boosting NRG Energy's performance. NRG expects $550 million in synergies by the end of 2025.
In the past few years, NRG Energy has made significant progress in its transformation to an integrated power company through its focus on customers. Organic initiatives are also contributing toward the strong performance of company. Courtesy of its high-quality services, the company has been able to retain customers and does not depend on a single customer for its revenues. This adds stability and predictability to customer bills and NRG’s earnings.
The company's long-term capital allocation policy targets allocating nearly 80% of cash available for allocation, after debt reduction, to be returned to shareholders. In October 2024, the board of directors authorized an additional $1 billion for share repurchases as part of the existing share repurchase authorization. As of Oct. 31, 2024, $2 billion remained under the $3.7 billion authorization. The ongoing buyback of shares should have a positive impact on the company's earnings per share (EPS).
Headwinds for NRG
NRG Energy’s costs, results of operations, financial condition and cash flows could be adversely impacted by the disruption of its fuel supplies as it relies on natural gas, coal and oil to fuel the majority of its power generation facilities. These facilities are subject to the risks of disruptions or curtailments in power production if no fuel is available on time due to counterparty failure to perform or if there is a disruption in the fuel delivery system.
NRG Energy’s international operations are exposed to political and economic risks, commercial instability and events beyond the company's control that may negatively impact its business. NRG is exposed to fluctuations in foreign currency.
NRG’s Price Performance
In the past six months, shares of the company have risen 15.8% compared with the industry’s 6.6% growth.
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Stocks to Consider
Some better-ranked stocks from the same industry are Vistra Corp. VST, sporting Zacks Rank #1 (Strong Buy), and Pinnacle West Capital PNW and IDACORP IDA, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
VST’s long-term (three to five years) earnings growth rate is 17.4%. The Zacks Consensus Estimate for VST’s 2025 EPS indicates an increase of 36.8% year over year.
PNW’s long-term earnings growth rate is 8.22%. The company delivered an average earnings surprise of 246.2% for the trailing four quarters.
IDA’s long-term earnings growth rate is 8.31%. It delivered a trailing four-quarter average earnings surprise of 4.3%.
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NRG Energy, Inc. (NRG) : Free Stock Analysis Report
Pinnacle West Capital Corporation (PNW) : Free Stock Analysis Report
IDACORP, Inc. (IDA) : Free Stock Analysis Report
Vistra Corp. (VST) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
