NRG Energy Inc.
) has provided full-year 2013 and 2014 free cash flow (FCF) and
adjusted earnings before interest, taxes, depreciation and
amortization (EBITDA) guidance.
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Full-Year 2013 and 2014 Guidance
NRG Energy has increased its full-year 2013 FCF (before growth
investments) guidance to $1,050-$1,250 million from the earlier
projection of $1,000-$1,200 million. The company reaffirmed its
adjusted EBITDA guidance for full-year 2013.
NRG Energy has raised its full-year 2014 FCF (before growth
investments) guidance in the range of $1,100-$1,300 million from
the previous estimate of $900-$1,100 million. The company also
raised its adjusted EBITDA projection by $90 million to
Upward revision in guidance is primarily driven by positive
impacts from the GenOn acquisition in terms of enhancement in
operational efficiencies and cost synergies.
NRG Energy completed its GenOn-acquisition in Dec 2012 and has
already benefited from it in first-quarter 2013 through an
increased realized gross margin in the company's East segment. In
2013, the company expects to realize $150 million of cost and
operational synergies from this merger.
NRG Energy also received contract extensions from its clients -
Houston Technology Center and Washington-based St. Tammany
Electric and Claiborne Electric cooperatives to provide power
services. In addition, the company inked two new long-term power
supply commitments with Comcast and the city of Houston. We
believe these agreements will guarantee a stable earnings flow.
We appreciate NRG Energy's initiative to curb emission. It is
evident from the company's continued pro-environment work on the
Big Cajun generating facility in Louisiana. The company has
already commenced operations at its Borrego I Solar Generating
Station and Avra Valley Solar Generating Station.
In addition, NRG Energy's important projects - Ivanpah, Parish
Peaker, Dover and El Segundo Power Generating Station - are
progressing at a faster pace. We believe the timely
implementation of fossil-fuel and renewable energy-based programs
along with acquiring new assets and gathering service contracts
would benefit the company's future performance.
However, fuel price volatility and stringent regulatory
compliances are likely to pose challenges to NRG Energy's
NRG Energy currently has a Zacks Rank #3 (Hold). The other stocks
in the industry that are worth considering include
CPFL Energia S.A.
Companhia Paranaense de Energia
) with a Zacks Rank #1 (Strong Buy), and
Integrys Energy Group, Inc.
) with a Zacks Rank #2 (Buy).