Estimates for NRG Energy, Inc NRG) have been revised upward over the past 90 days, reflecting analysts’ confidence in the company’s operational efficiency. The Zacks Consensus Estimate for 2018 and 2019 earnings have moved up 96% and 92% to $3.29 and $3.62, respectively.
Shares of NRG Energy have surged 109.7% in the last 12 months versus the Utility – Electric Power industry’s decline of 5.6%. The company is gaining from cost-saving initiatives under the Transformation Plan, debt-reduction plans and expansion of renewable operations, which will drive future growth. NRG Energy sports a Zacks Rank #1 (Strong Buy).
The stock carries a VGM Score of B. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors. Back tested results show that stocks with a favorable VGM Score of A or B coupled with a bullish Zacks Rank offer the best investment bets.
Let’s focus on the factors that make NRG Energy an attractive stock to invest in.
Earnings Result and Surprise Trend: NRG Energy reported earnings of 87 cents per share in the first quarter of 2018, beating the Zacks Consensus Estimate of break even. The company has an impressive earnings surprise history. NRG Energy pulled off an average positive earnings surprise of 507.93 % in the last four quarters.
Focus to Transformation Plan: NRG Energy has initiated its three-year Transformation Plan in July 2017 and expects to generate $3.2 billion through asset sales. This plan is designed to boost cost savings and future earnings.
Share Buyback Strategy: NRG Energy’s board of directors authorized a $1-billion share buyback program, of which $500 million is scheduled to be repurchased 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. The share buyback program will raise shareholders’ value.
Financial Strength: NRG Energy expects to conduct business at the highest level of operational performance. Additionally, its predictable earnings, benefits from Transformation Plans and growth in retail business will allow it to generate $8 billion of excess cash by 2022.The company plans to utilize the cash by reinvesting in the business, increasing value of its shareholders and make strategic acquisitions.
Other Stocks to Consider
A few other top-ranked stocks from the same space are Alliant Energy Corporation LNT, Ameren Corporation AEE and WEC Energy Group, Inc WEC. All the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Alliant Energy pulled off a positive earnings surprise of 1.96% in the last quarter. The Zacks Consensus Estimate for 2018 EPS moved up by a penny in the last 60 days.
Ameren had a positive earnings surprise of 6.90% in the last quarter. The Zacks Consensus Estimate for 2018 EPS moved up 0.7% in the last 60 days.
WEC Energy pulled off a positive earnings surprise of 6.03% in the last quarter. The Zacks Consensus Estimate for 2018 EPS moved up by a penny in the last 60 days.
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