NRG Energy, Inc.NRG will report first-quarter 2018 results before the market opens on May 3. In the last reported quarter, this company delivered a positive surprise of 737.50%. Let's see how things are shaping up for this earnings season.
Factors to Consider
NRG Energy announced its transformation plan in July 2017, which is aimed to save more than $1 billion through recurring cost cuts and margin improvements. The company expects to fully implement the Transformation Plan by the end of 2020 with significant completion by the end of 2018.
The initiatives undertaken by NRG Energy through its Transformation Plan will increase annual cost savings from $500 million in 2018 to nearly $590 million in 2020. Margins of the company are likely to expand substantially from $30 million in 2018 to $215 million in 2020.
NRG Energy, Inc. Price and EPS Surprise
In fourth-quarter 2017, the company successfully refinanced its 2023 unsecured notes at a record low rate of 5.75%, reducing annual interest expenses. Also, the redemptions of $600 million corporate debt eliminated the nearest corporate maturities and combined with interest savings on the 2023 notes refinancing led to annual cash interest savings of $55 million. Backed by these factors, the company will save in interest expenses in the first quarter as well, thereby expanding margins.
The Zacks Consensus Estimate for first-quarter total revenues has decreased 19% to $2,234 million year over year. Also, the Zacks Consensus Estimate projects breakeven earnings against a loss of 52 cents in the year-ago quarter.
Our proven model does not conclusively show that NRG Energy is going to beat estimates this season. This is because it does not have the right combination of two key ingredients. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat estimates.
You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Zacks ESP: The company's Earnings ESP is 0.00%.
Zacks Rank: NRG Energy sports a Zacks Rank #1. The company's favorable Zacks Rank when combined with 0.00% ESP lowers the possibility of an earnings beat this season.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
Stocks to Consider
You can consider stocks from the Zacks Utility Power industry that are expected to deliver a positive surprise this earnings season.
The AES Corporation AES is expected to report first-quarter earnings on May 8. The company has an Earnings ESP of +4.00% and a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank stocks here .
IDACORP, Inc. IDA is expected to report first-quarter earnings on May 3. The company has an Earnings ESP of +3.55% and a Zacks Rank #2.
Hawaiian Electric Industries, Inc. HE is expected to report first-quarter earnings on May 4. The company has an Earnings ESP of +0.91% and a Zacks Rank #2.
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