Yahoo Finance Earnings Beat: NRG Energy, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models
It's been a pretty great week for NRG Energy, Inc. (NYSE:NRG) shareholders, with its shares surging 15% to US$80.29 in the week since its latest second-quarter results. The results were mixed; although revenues of US$6.7b fell 20% short of what the analysts had predicted, per-share (statutory) earnings of US$3.37 beat expectations by 118%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on NRG Energy after the latest results.
Check out our latest analysis for NRG Energy
After the latest results, the six analysts covering NRG Energy are now predicting revenues of US$30.2b in 2024. If met, this would reflect a credible 4.5% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to crater 43% to US$5.50 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$29.8b and earnings per share (EPS) of US$5.69 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.
The consensus price target held steady at US$83.64, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on NRG Energy, with the most bullish analyst valuing it at US$110 and the most bearish at US$41.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that NRG Energy's revenue growth is expected to slow, with the forecast 9.3% annualised growth rate until the end of 2024 being well below the historical 26% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.7% per year. Even after the forecast slowdown in growth, it seems obvious that NRG Energy is also expected to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for NRG Energy. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for NRG Energy going out to 2026, and you can see them free on our platform here..
Before you take the next step you should know about the 3 warning signs for NRG Energy (2 make us uncomfortable!) that we have uncovered.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
