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Reasons to Add NRG Energy (NRG) to Your Portfolio Right Now
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NRG Energy, Inc. (NRG - Free Report) continues to benefit from its initiative to expand its operations through organic and inorganic ways. Its diverse customer base and long-term customer retention policy further boost its performance. Given its growth opportunities, NRG makes for a solid investment option in the utility sector.
Let’s focus on the factors that make this currently Zacks Rank #1 (Strong Buy) company a strong investment pick at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for 2024 earnings per share (EPS) has moved north 12.2% in the past 30 days to $5.96.
NRG Energy’s long-term (three to five years) earnings growth rate is 13.75%. It delivered an average earnings surprise of 4.7% in the last four quarters.
Return on Equity
Return on equity (ROE) indicates how efficiently a company has been utilizing the funds to generate higher returns. Currently, NRG’s ROE is 41.72%, higher than the industry’s average of 7%. This indicates that the company has been utilizing the funds more constructively than its peers in the utility electric power industry.
Liquidity
NRG Energy’s current ratio at the end of third-quarter 2023 was 1.06 compared with the industry’s average of 0.82. The ratio being greater than one indicates the company’s ability to meet its future short-term liabilities without difficulties.
Dividend Growth & Repurchase Program
NRG Energy increases shareholders’ value through share repurchases and dividend payments. Currently, its quarterly dividend is 37.75 cents per share, resulting in an annualized dividend of $1.51 per share. NRG’s current dividend yield is 2.92%, better than the Zacks S&P 500 Composite’s 1.38%.
In June 2023, the company revised its long-term capital allocation policy to allocate approximately 80% of cash available for allocation after debt reduction to be returned to shareholders. It announced an increase in its share repurchase authorization to $2.7 billion, set to be executed through 2025. During the three months ended Sep 30, 2023, NRG completed $50 million of share repurchases at an average price of $37.82 under the $2.7-billion authorization. In November 2023, the company further announced that it has entered into accelerated share repurchase agreements with multiple dealers to repurchase $950 million of NRG’s common stock.
Price Performance
In the past six months, the stock has returned 37.4% against the industry’s decline of 8.6%.
Consolidated Edison’s long-term earnings growth rate is 2%. The Zacks Consensus Estimate for the company’s 2024 EPS is pinned at $5.30, implying a year-over-year increase of 5.8%.
OGE Energy’s long-term earnings growth rate is 3.65%. The company delivered an average earnings surprise of 8.3% in the last four quarters.
NiSource’s long-term earnings growth rate is 7.15%. The consensus estimate for the company’s 2024 EPS is pinned at $1.71, indicating year-over-year growth of 6.9%.
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Reasons to Add NRG Energy (NRG) to Your Portfolio Right Now
NRG Energy, Inc. (NRG - Free Report) continues to benefit from its initiative to expand its operations through organic and inorganic ways. Its diverse customer base and long-term customer retention policy further boost its performance. Given its growth opportunities, NRG makes for a solid investment option in the utility sector.
Let’s focus on the factors that make this currently Zacks Rank #1 (Strong Buy) company a strong investment pick at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for 2024 earnings per share (EPS) has moved north 12.2% in the past 30 days to $5.96.
NRG Energy’s long-term (three to five years) earnings growth rate is 13.75%. It delivered an average earnings surprise of 4.7% in the last four quarters.
Return on Equity
Return on equity (ROE) indicates how efficiently a company has been utilizing the funds to generate higher returns. Currently, NRG’s ROE is 41.72%, higher than the industry’s average of 7%. This indicates that the company has been utilizing the funds more constructively than its peers in the utility electric power industry.
Liquidity
NRG Energy’s current ratio at the end of third-quarter 2023 was 1.06 compared with the industry’s average of 0.82. The ratio being greater than one indicates the company’s ability to meet its future short-term liabilities without difficulties.
Dividend Growth & Repurchase Program
NRG Energy increases shareholders’ value through share repurchases and dividend payments. Currently, its quarterly dividend is 37.75 cents per share, resulting in an annualized dividend of $1.51 per share. NRG’s current dividend yield is 2.92%, better than the Zacks S&P 500 Composite’s 1.38%.
In June 2023, the company revised its long-term capital allocation policy to allocate approximately 80% of cash available for allocation after debt reduction to be returned to shareholders. It announced an increase in its share repurchase authorization to $2.7 billion, set to be executed through 2025. During the three months ended Sep 30, 2023, NRG completed $50 million of share repurchases at an average price of $37.82 under the $2.7-billion authorization. In November 2023, the company further announced that it has entered into accelerated share repurchase agreements with multiple dealers to repurchase $950 million of NRG’s common stock.
Price Performance
In the past six months, the stock has returned 37.4% against the industry’s decline of 8.6%.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same industry are Consolidated Edison (ED - Free Report) , OGE Energy (OGE - Free Report) and NiSource Inc (NI - Free Report) , each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Consolidated Edison’s long-term earnings growth rate is 2%. The Zacks Consensus Estimate for the company’s 2024 EPS is pinned at $5.30, implying a year-over-year increase of 5.8%.
OGE Energy’s long-term earnings growth rate is 3.65%. The company delivered an average earnings surprise of 8.3% in the last four quarters.
NiSource’s long-term earnings growth rate is 7.15%. The consensus estimate for the company’s 2024 EPS is pinned at $1.71, indicating year-over-year growth of 6.9%.