We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
What's in Store for NRG Energy (NRG) this Earnings Season?
Read MoreHide Full Article
NRG Energy, Inc. (NRG - Free Report) is set to report fourth-quarter 2016 results before market open on Feb 28. The company posted a positive earnings surprise of 35.1% last quarter, bringing the trailing four-quarter average to a positive 22.58%. Let’s see how things are shaping up for this announcement.
Factors to Consider
NRG Energy’s revenues are expected to decrease because of above-average temperatures in its service territories in the fourth quarter.
Energy margins remain under pressure in lieu of new capacity performance requirements, low growth and a significant amount of new gas deals coming online in the next few years, resulting in a less-than-favorable outlook for energy margins.
On the flip side, NRG Energy’s focus on expanding its 4.4 gigawatt (GW) renewable portfolio will contribute to its stable base of earnings in the fourth quarter and provide visibility to future cash flows.
The company is on track to achieve cost savings of $400 million through 2017 by way of reduction in administrative, marketing and development expenses, and operating and maintenance expense. This will aid margins in the to-be reported quarter.
Moreover, NRG Energy is working to lower its debt levels and strengthen its balance sheet. The company intends to reduce corporate debt by an additional $400 million through 2017. Reduction in debts will lower the company’s interest burden and positively impact its bottom line.
Earnings Whispers
Our proven model does not conclusively show that NRG Energy is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. But that is not the case here, as you will see below.
Zacks ESP: NRG Energy has an Earnings ESP of -60.00%. This is because the Most Accurate estimate stands at a loss of 16 cents while the Zacks Consensus Estimate is pegged at a loss of 10 cents.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Though the company’s Zacks Rank #3 increases the possibility of a beat, its negative ESP makes surprise prediction difficult.
Note that we caution against stocks with Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Peer Releases
American Electric Power Co., Inc. (AEP - Free Report) reported fourth-quarter 2016 operating earnings of 67 cents per share, beating the Zacks Consensus Estimate of 55 cents by 21.8%.
NextEra Energy, Inc. (NEE - Free Report) reported fourth-quarter 2016 adjusted earnings of $1.21 per share, missing the Zacks Consensus Estimate of $1.29 by 6.2%. Reported earnings were, however, up 3.4% year over year.
WEC Energy Group (WEC - Free Report) reported fourth-quarter 2016 adjusted earnings of 61 cents per share, a penny below both the Zacks Consensus Estimate and the year-ago figure.
A Full-Blown Technological Breakthrough in the Making
Zacks’ Aggressive Growth Strategist Brian Bolan explores autonomous cars in our latest Special Report, Driverless Cars: Your Roadmap to Mega-Profits Today. In addition to who will be selling them and how the auto industry will be impacted, Brian reveals 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
What's in Store for NRG Energy (NRG) this Earnings Season?
NRG Energy, Inc. (NRG - Free Report) is set to report fourth-quarter 2016 results before market open on Feb 28. The company posted a positive earnings surprise of 35.1% last quarter, bringing the trailing four-quarter average to a positive 22.58%. Let’s see how things are shaping up for this announcement.
Factors to Consider
NRG Energy’s revenues are expected to decrease because of above-average temperatures in its service territories in the fourth quarter.
Energy margins remain under pressure in lieu of new capacity performance requirements, low growth and a significant amount of new gas deals coming online in the next few years, resulting in a less-than-favorable outlook for energy margins.
On the flip side, NRG Energy’s focus on expanding its 4.4 gigawatt (GW) renewable portfolio will contribute to its stable base of earnings in the fourth quarter and provide visibility to future cash flows.
The company is on track to achieve cost savings of $400 million through 2017 by way of reduction in administrative, marketing and development expenses, and operating and maintenance expense. This will aid margins in the to-be reported quarter.
Moreover, NRG Energy is working to lower its debt levels and strengthen its balance sheet. The company intends to reduce corporate debt by an additional $400 million through 2017. Reduction in debts will lower the company’s interest burden and positively impact its bottom line.
Earnings Whispers
Our proven model does not conclusively show that NRG Energy is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. But that is not the case here, as you will see below.
Zacks ESP: NRG Energy has an Earnings ESP of -60.00%. This is because the Most Accurate estimate stands at a loss of 16 cents while the Zacks Consensus Estimate is pegged at a loss of 10 cents.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
NRG Energy, Inc. Price and EPS Surprise
NRG Energy, Inc. Price and EPS Surprise | NRG Energy, Inc. Quote
Zacks Rank: Though the company’s Zacks Rank #3 increases the possibility of a beat, its negative ESP makes surprise prediction difficult.
Note that we caution against stocks with Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Peer Releases
American Electric Power Co., Inc. (AEP - Free Report) reported fourth-quarter 2016 operating earnings of 67 cents per share, beating the Zacks Consensus Estimate of 55 cents by 21.8%.
NextEra Energy, Inc. (NEE - Free Report) reported fourth-quarter 2016 adjusted earnings of $1.21 per share, missing the Zacks Consensus Estimate of $1.29 by 6.2%. Reported earnings were, however, up 3.4% year over year.
WEC Energy Group (WEC - Free Report) reported fourth-quarter 2016 adjusted earnings of 61 cents per share, a penny below both the Zacks Consensus Estimate and the year-ago figure.
A Full-Blown Technological Breakthrough in the Making
Zacks’ Aggressive Growth Strategist Brian Bolan explores autonomous cars in our latest Special Report, Driverless Cars: Your Roadmap to Mega-Profits Today. In addition to who will be selling them and how the auto industry will be impacted, Brian reveals 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>