We are upgrading our recommendation on NRG Energy Inc. to Neutral
from Underperform, due to its stable liquidity position, systematic
acquisitions, ongoing asset drop down and steady focus on expansion
of its renewable portfolio. The company's drop-down strategy will
streamline its operations while providing funds for growth
ventures. The positive impact of earlier acquisitions continues to
boost its performance by increasing customer count. However,
stringent environmental regulations and dependence on weather
conditions remain causes of concern. In the third-quarter 2014, NRG
Energy's earnings missed the Zacks Consensus Estimate while
revenues beat. On a year-over-year basis, both the top and bottom
lines improved on positive outcomes from the acquisitions and
higher sales volumes at the thermal business.
Princeton, NJ-headquartered NRG Energy Inc. is a wholesale power
generation company engaged in the ownership, development,
construction and operation of power generation facilities. The
company is also involved in the trade of fuel and transportation
services the sale of energy, capacity and related products in the
U.S. and internationally and the supply of electricity and energy
services to retail electricity customers in the Texas market.
NRG Energy has a significant presence in major competitive power
markets in the U.S., as well as a major retail electricity
franchise in the Electric Reliability Council of Texas (ERCOT)
market. The company's operations include competitive energy
production and cogeneration facilities, power marketing, district
heating and cooling production, thermal energy production and
resource recovery facilities spread across North America and
Australia. NRG Energy operates its retail activities under the
brands like Reliant Energy, Green Mountain Energy and Energy Plus.
NRG Energy's power plants generate electricity using a wide array
of fuel sources including gas, coal, oil, nuclear and renewable
energies (solar and wind).
As of Jun 30, 2014, NRG Energy's total net generation capacity
stood at 52,094 megawatt (MW).
During the second-quarter 2014 earnings release, NRG Energy
announced that it will restructure its retail, residential solar
and home product and services businesses into NRG Home and the
wind, large-scale solar and renewables-driven microgrid businesses
into NRG Renew.
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