NRG Energy continues to report in red as rising expenses are
continuously eating the company's margins. In addition increase
share outstanding is diluting earnings. NRG Energy posted strong
revenues in second-quarter 2014 primarily on the back of growth in
retail customer counts primarily as a result of strategic
acquisitions, and higher sales volumes at the thermal business. We
believe NRG Energy's focus on expanding renewable assets and
optimization of power generation capacity will likely boost its
future performance. The company plans to reorganize its existing
operations and focus more on the high growth segments. Post
reorganization NRG Energy will have three main businesses, all
aiming to improve quality and reliability of services offered by
the company. However, stringent environmental regulations and
disruption in fuel supply are causes of concern. Thus, we maintain
our Neutral recommendation.
Princeton, N.J.-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
United States and internationally and the supply of electricity and
energy services to retail electricity customers in the Texas
NRG Energy has a significant presence in major competitive power
markets in the United States, 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 April 1, 2014, NRG Energy's total net generation capacity
stood at over 53,000 megawatt (MW).
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