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Why is NRG Energy (NRG) Up 5.8% Since Its Last Earnings Report?

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A month has gone by since the last earnings report for NRG Energy, Inc. (NRG - Free Report) . Shares have added about 5.8% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is NRG due for a pullback? 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 Q1 Earnings Beat, Restructuring On Track

NRG Energy reported earnings of 87 cents per share in the first quarter of 2018, beating the Zacks Consensus Estimate of break even by a wide margin.

Revenues

NRG Energy posted revenues of $2,421 million in the quarter, beating the Zacks Consensus Estimate of $2,234 million by 8.4%. The quarterly revenues improved by 1.63% year over year.

Highlights of the Release

Operation & Maintenance and Other cost of operations in the first quarter was $2,017 million, down 15.8% from $2,396 in the year-ago quarter.

Adjusted EBITDA in the first quarter was $549 million compared with $385 million in the year-ago period.

At the end of first-quarter 2018, the company realized $80 million of its 2018 cost savings target as part of its announced Transformation Plan.

Financial Highlights

As of Mar 31, 2018, NRG Energy had cash and cash equivalents of $764 million compared with $991 million as of Dec 31, 2017.

As of Mar 31, 2018, the company’s long-term debt and capital leases (excluding current portion) were $15,406 million, compared with $15,716 million as of Dec 31, 2017.

The company’s net cash provided/(used) in operating activities in the first quarter of 2018 was $357 million, compared with ($82) million in the prior-year period.

Capital expenditure in the first quarter of 2018 was $358 million, up 517% from $236 million in the first quarter of 2017.

The NRG board of directors has authorized $1 billion for share repurchases, with the first $500 million program to begin immediately. During the first quarter, NRG Energy repurchased 3.1 million shares of its common stock for $93 million at an average cost of $29.75 per share.

Guidance

NRG Energy reaffirmed 2018 adjusted EBITDA guidance in the range of $2,800-$3,000 million and free cash flow before growth investments within $1,550-$1,750 million.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. There have been two revisions lower for the current quarter.

NRG Energy, Inc. Price and Consensus

 

NRG Energy, Inc. Price and Consensus | NRG Energy, Inc. Quote

VGM Scores

At this time, NRG has a nice Growth Score of B, though it is lagging a lot on the momentum front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for growth investors than value investors.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Interestingly, NRG has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.


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