NRG
NRG Energy Inc
Utilities, Energy
09/21/2017
Presented
| Date | 09/15/2017 |
| Price | $22.93 |
| Market Cap | $7.25B |
| Ent Value | $22.97B |
| P/E Ratio | N/A |
| Book Value | $3.23 |
| Div Yield | 0.52% |
| Shares O/S | 316.00M |
| Ave Daily Vol | 6,990,150 |
| Short Int | N/A |
Current
| Price | $89.14 |
| Market Cap | $18.40B |
| NRG Energy, Inc. engages in the production, sale, and distribution of energy and energy services. Its wholesale operations include plant operations, commercial operations, EPC, energy services and other critical related functions. It operates through the following segments: Generation, Retail, Renewables and Corporate. The Generation segment includes company's wholesale operations including plant operations, commercial operations, EPC, energy services and other critical related functions. The Retail segment provides energy and related services as well as personal power to Mass Market consumers through various brandsand sales channels across the U.S. Retail also includes C&I customers and other distributed and reliability products which are within NRG's Business Solutions group. The Renewables segment focuses on the acquisition, development and operation and maintenance of utility scale wind and solar, community solar and distributed solar generation assets as well as the management and operations of the renewable generation assets owned by NRG Yield, Inc. The Corporate segment includes residential solar and electric vehicle services. The company was founded in 1989 and is headquartered in Princeton, NJ. |
Publicly traded companies mentioned herein: Calpine Corporation (CPN), NRG Energy Inc (NRG), NRG Yield Inc (NYLD), Vistra Energy Corp (VST)
Highlights
The presenter is long shares of NRG Energy at $22.93, and sees a relatively clear path for the stock to rise into the $30s following the announcement of GenOn’s filing for Chapter 11 (June 14, 2017) and management’s July 12, 2017 Business Update presentation. The NRG Transformation Plan - which includes the monetization of 50-100% of NRG’s stake in NRG Yield (NYLD), other asset sales, and cost cuts - should unlock meaningful value for shareholders and allow for both debt reduction and share buybacks within a reasonable time horizon (i.e., 2018). NRG’s stock price has been depressed due to how poorly it screens [“like an over-levered independent power producer (IPP)]’”, but now the story should change rapidly and it will become more apparent as management executes on the plan. By 2020, NRG could be generating $2.5bn of EBITDA and have $1/ share of net cash. If debt is reduced to the target 3x level and buyback activity is aggressive, a more bullish scenario could play out and the stock could see the $40s in just 12-18 months’ time.
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