Why Is NRG (NRG) Down 14.4% Since Last Earnings Report?

A month has gone by since the last earnings report for NRG Energy (NYSE:NRG). Shares have lost about 14.4% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is NRG due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

NRG Energy Earnings & Revenues Increase Y/Y in 2019

NRG Energy posted earnings of $15.59 per share in 2019, up from earnings of $1.49 in 2018.

Revenues

NRG Energy posted revenues of $2,214 million in the quarter under review, which increased 5.9% from $2,091 million in the year-ago quarter.

In 2019, the company generated revenues of $9.82 billion that missed the Zacks Consensus Estimate of $9.89 billion by 0.7%. The top line improved from $9.47 billion in 2018.

Highlights of the Release

Fourth-quarter Adjusted EBITDA was $384 million compared with $273 million in the year-ago quarter.

The company realized $590 million of its 2019 cost savings target and $135 million in margin enhancement, as part of its Transformation Plan.

NRG Energy completed $250 million of share repurchase authorization that was announced during second-quarter 2019 earnings call. Since Jan 1 2019, the company has completed $1.6-billion share repurchase.

Financial Highlights

As of Dec 31, 2019, NRG Energy had cash and cash equivalents of $345 million compared with $563 million as of Dec 31, 2018.

As of Dec 31, the company’s long-term debt and capital leases amounted to $5,803 million compared with $6,449 million as of Dec 31, 2018.

The company’s net cash provided operating activities at the end of 2019 was $1,413 million compared with $1,377 million at the end of 2018.

Capital expenditures in 2019 were $228 million compared with $388 million in 2018.

Guidance

The company expects 2020 adjusted EBITDA guidance in the range of $1,900-$2,100 million. It also anticipates free cash flow before growth investments in the range of $1,275-$1,475 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted 31.11% due to these changes.

VGM Scores

At this time, NRG has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision looks promising. Notably, NRG has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.