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Why Is NRG (NRG) Down 1.8% Since Last Earnings Report?

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A month has gone by since the last earnings report for NRG Energy (NRG - Free Report) . Shares have lost about 1.8% in that time frame, underperforming the S&P 500.

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

NRG Energy Q2 Earnings Lag Estimates, Revenues Fall Y/Y

NRG Energy second-quarter 2020 earnings of $1.27 per share from continuing operations missed the Zacks Consensus Estimate of $1.53 by 17%. Nevertheless, the bottom line improved 69.3% from the year-ago quarter’s figure.

Revenues

NRG Energy’s quarterly revenues logged $2,238 million, down 9.2% from the year-ago quarter’s figure.

Highlights of the Release

Second-quarter adjusted EBITDA was $574 million compared with $469 million in the year-ago quarter.

The company’s total operating costs and expenses in the quarter amounted to $1.75 billion, down 18.3% from $2.15 billion in the year-ago quarter.  The upside is owing to lower supply and operating costs.

Operating income was $484 million, up 51.25% from $320 million in the year-ago quarter. Interest expenses of $96 million were down 8.6% from $105 million in the prior-year quarter.

Financial Highlights

As of Jun 30, 2020, the company had cash and cash equivalents worth $418 million compared with $345 million as of Dec 31, 2019.

As of Jun 30, 2020, the company’s long-term debt amounted to $5,810 million compared with $5,803 million as of Dec 31, 2019.

The company’s net cash provided by operating activities in the first half of 2020 was $692 million compared with $425 million generated in the year-ago first half.

Capital expenditures in the first six months of 2020 were $116 million compared with $107 million in the comparable period last year.

Guidance

The company reaffirmed 2020 and 2021 adjusted EBITDA guidance in the range of $1,900-$2,100 million, respectively. It also anticipates free cash flow before growth investments in the band of $1,275-$1,475 million for both years.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -10.06% due to these changes.

VGM Scores

Currently, NRG has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, NRG has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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