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We expect utility company NRG Energy Inc. (NRG - Analyst Report) to beat expectations when it reports second-quarter 2013 results before the market opens on Aug 9, 2013.

Why a Likely Positive Surprise?

Our proven model shows that NRG Energy is likely to beat earnings because it has the right combination of key factors.

Positive Zacks ESP: Expected Surprise Prediction or ESP (Read: Zacks Earnings ESP: A Better Method), which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +3.33%. This is meaningful and a leading indicator of a likely positive earnings surprise for this company.

Zacks #3 Rank (Hold): The stocks with Zacks Ranks of #1, 2 and 3 have a significantly higher chance of beating earnings. The Sell rated stocks (#4 and 5) should never be considered going into an earnings announcement.

The combination of NRG Energy’s Zacks Rank #3 (Hold) and +3.33% ESP make us confident of a positive earnings beat on Aug 9.

What is Driving Better-than-Expected Earnings?

We believe that the positive impact from the GenOn-acquisition, in terms of enhancement in operational efficiencies and cost synergies, will play a vital role in improving NRG Energy’s performance. In 2013, the company expects to realize $150 million of cost and operational synergies from this transaction.

Recently, NRG Energy entered into a contract-extension agreement with two clients - Houston Technology Center and St. Tammany Electric and Claiborne Electric co-operatives, to provide power services. The company also signed two new long-term power supply commitments with Comcast and the city of Houston. We believe these initiatives will help to provide a secured earnings flow in the near future.

In addition, NRG Energy’s two solar photovoltaic (PV) facilities - Kansas South and TA-High Desert projects – have started commercial operation. These two projects have power generation capacity of 20 megawatts (MW) each. NRG Energy will sell the output to PG&E Corporation’s (PCG - Analyst Report) subsidiary Pacific Gas and Electric Company and Edison International’s (EIX - Analyst Report) unit Southern California Edison.

Other Stocks to Consider

NRG Energy is not the only organization looking up this earnings season. We see another utility player which is likely to beat earnings.

Great Plains Energy Incorporated (GXP - Snapshot Report), Earnings ESP of +2.56% and Zacks Rank #3 (Hold).

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