NRG Energy, Inc.'s (NRG - Free Report) cost saving initiatives, service to wide variety of customers, expansion of renewable portfolio and strategic asset drop-down program are expected to support the long-term growth objectives of the company.
Retaining this Zacks Rank #3 (Hold) stock in your portfolio is a good idea, given the following positive factors.
Positive Growth Projections: The Zacks Consensus Estimate for earnings is 64 cents on revenues of $13 billion for 2017. While the bottom line is down 59.81% year over year as of yet, the top-line projection is 2.87% higher. For 2018, the Zacks Consensus Estimate for earnings is pegged at $ 1.38 on $ 12.74 billion revenues. While earnings represent a massive 117.32% rally, revenues reflect a 2% drop.
Estimates Moving Up: The Zacks Consensus Estimate has witnessed upward revisions in the last 60 days. Estimates for 2017 have increased 25.5% in the last 60 days to 64 cents per share from 51 cents.
Positive Earnings Surprise History: NRG Energy surpassed the Zacks Consensus Estimate in three of the last four quarters with an average beat of 457.07%.
During third quarter, NRG Energy decided to sell power from its three solar projects to the Hawaiian Electric Company. Both companies signed the agreement for 22 years. These three projects were earlier acquired by NRG Energy from SunEdison. The solar projects will mark NRG Energy’s first footstep in the Hawaii utility-scale solar market and will strengthen its position.
The company, with its ambitious transformation plans aims to divest its assets in the range of $2.5-$4 billion. It anticipates the usage of the net proceeds to strengthen its balance sheet by repayment of a debt of $13 billion.
Shares of NRG Energy have outperformed the industry’s return in the last 12 months. The company has returned a whopping 107.4% compared with the industry’s gain of 5.3%.
The company with its transformation plan to save more than $1 billion through recurring cost cuts, margin improvements along with a wide variety of customers is geared up for further growth from the present levels.
Stocks to Consider
Some better-ranked stocks from the same industry are Ameren Corporation (AEE - Free Report) , CenterPoint Energy, Inc. (CNP - Free Report) and Fortis Inc. (FTS - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Ameren Corporation delivered a four-quarter average positive surprise of 2.83%. The company’s long-term earnings growth rate is pegged at 6.50%.
CenterPoint Energy delivered a four-quarter average positive surprise of 10.34%. The company’s long-term earnings growth rate is pegged at 4.33%.
Fortis delivered a four-quarter average positive surprise of 10.99%. The company’s long-term earnings growth rate is pegged at 5.50%.
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