Diverse power generator
NRG Energy Inc.
) is slated to release its second-quarter 2012 earnings results
before market open on August 8, 2012.
First Quarter Performance
NRG Energy, Inc. reported a loss of 92 cents per share in first
quarter 2012 compared with a loss of $1.06 in the prior-year
quarter. This was due to mild weather, switching from coal to gas
and outage at the STP unit 2. The quarterly loss was wider than the
Zacks Consensus Estimate of a loss of 11 cents per share.
NRG Energy's total operating revenue of $1.86 billion in first
quarter 2012 decreased 6.67% from $2 billion in the year-ago
quarter. The year-over-year decline was due to lower commodity
prices and mild weather. The quarterly revenue fell short of the
Zacks Consensus Estimate of $2.46 billion.
The operating expenses of the company increased 20.88% year over
year to $2.03 billion due to higher cost of operations, and
selling, general and administrative expenses; partially offset by a
decline in development expenses.
NRG Energy maintained its 2012 adjusted EBITDA expectation in the
range of $1,825 million to $2,000 million, including wholesale and
retail contribution in the range of $1,200-$1,300 million and
$625-$700 million, respectively.
The 2012 guidance for free cash flow was also reaffirmed in the
range of $800 million to $1,000 million.
The guidance takes into account normalized summer weather
condition in the company's service territories.
The Zacks Consensus Estimate for the second quarter 2012 is 16
cents per share, an estimated decline of 65% from 46 cents reported
in the year-ago quarter. The current Zacks Consensus Estimate
ranges between a loss of 32 cents per share and earnings of 47
cents per share.
The full year 2012 Zacks Consensus Estimate is 94 cents, up a
projected 28.6% from 73 cents reported in the prior year. The
current Zacks Consensus Estimate ranges between 52 cents per share
and $1.20 per share.
Estimate Revisions Trend
The past 30 days have seen two of the five estimates declining
for the second quarter, while two moved in the opposite direction.
There were no changes in the quarterly estimates in the last 7
For full year 2012, of the 8 available estimates, four estimates
moved up while two estimates went down, in the last 30 days. There
were no changes in the estimates in the prior 7 days.
The Zacks Consensus Estimate for the second quarter inched down by
5 cents in the last 30 days. However, for full-year 2012, the
consensus estimate increased by 7 cents in the past 30 days. For
the past 7 days, the consensus earnings estimates remained static
both for the second quarter and full year 2012.
With respect to earnings surprise, the company surpassed our
expectation in three of the last four quarters, but widely missed
the consensus in the last reported quarter.
The earnings surprise in the last four quarters ranged from
(736.4%) to 22.9%. The average surprise over the last four quarters
is a negative 167.8%.
NRG Energy has a diverse portfolio of electric generation
facilities in terms of geography, fuel type and dispatch levels,
which helps mitigate risks associated with fuel price volatility
and market demand cycles. Besides, the company is working on its
long-term strategy of divesting its non-core assets in order to
focus on its retail electric business in core domestic markets.
The company has been investing to develop its green generation
portfolio and working to increase savings for its customers while
maintaining a steady supply of power. The Board of Directors of the
company announced its first ever quarterly dividend of 9 cents per
share. We appreciate these initiatives taken by the company to
boost its overall performance.
NRG Energy follows a practise of selling forward a substantial
portion of its baseload power. Any failure to meet its supply
obligations under these long-term contracts may result in huge
payments to the contracted party, increasing the company's
financial burden. Like other regulated utility operators, this
company too suffers from fluctuating weather conditions in its
We have maintained our Neutral recommendation on the company.
The company has a Zacks #3 Rank implying a short-term Hold rating
on the stock. NRG Energy Inc. competes with
Xcel Energy Inc.
DTE Energy Co.
CenterPoint Energy Inc.
Based in Princeton, New Jersey, NRG Energy is a wholesale power
generation company engaged in the ownership, development,
construction, and operation of power generation facilities.
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