It has been about a month since the last earnings report for NRG Energy (NRG). Shares have added about 9.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is NRG due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
NRG Energy Lags Q3 Earnings Estimates, Tops Revenues
NRG Energy delivered earnings of 94 cents per share in third-quarter 2018 results, missing the Zacks Consensus Estimate of $1.12 per share by 16%. Earnings improved 56.7% year over year on the back of improved performance by the integrated retail and generation platforms.
NRG Energy posted revenues of $3,061 million in the quarter, beating the Zacks Consensus Estimate of $2,960 million by 3.4%. Quarterly revenues improved 11.7% year over year.
Highlights of the Release
Total operating costs and expenses in the third quarter was $2,659 million, up 8.8% from the year-ago quarter's tally.
Adjusted EBITDA in the third quarter was $677 million compared with $552 million a year ago.
Through the third quarter of 2018, the company realized $ 375 million of cost savings target in 2018 under the Transformation Plan.
As of Sep 30, 2018, NRG Energy had cash and cash equivalents of $1,359 million compared with $767 million as of Dec 31, 2017.
As of Sep 30, 2018, the company's long-term debt and capital leases were $6,658 million compared with $9,180 million as of Dec 31, 2017.
The company's net cash provided operating activities at the end of the first nine months of 2018 was $1,082 million compared with $736 million at the end of the first nine months of 2017.
Capital expenditure at the end of Sep 30, 2018, was $345 million compared with $172 million at the end of Sep 30, 2017.
NRG Energy narrowed the 2018 adjusted EBITDA guidance to a range of $1,700-$1,800 million from $2,800-$3,000 million and free cash flow before growth investments to the range of $1,240-$1,340 million from $1,550-$1,750 million. The narrowed guidance reflects the completion of sale of the NRG Yield and the Renewables Platform, as well as the previously announced divestment of the South Central business unit.
The company initiated 2019 adjusted EBITDA guidance in the range of $1,850-$2,050 million and free cash flow before growth investments in the range of $1,405-$1,605 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -39.29% due to these changes.
Currently, NRG has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, NRG has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.