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NRG (NRG) Up 2.2% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for NRG Energy (NRG). Shares have added about 2.2% 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 the most recent earnings report in order to get a better handle on the important drivers.

NRG Energy Q2 Earnings & Revenues Surpass Estimates

NRG Energy, Inc. reported second-quarter 2023 earnings of $1.10 per share, which beat the Zacks Consensus Estimate of $1.07 by 2.8%. The bottom line also improved 233.3% from the year-ago quarter’s level of 33 cents.

Revenues

Total revenues came in at $6,348 million, which surpassed the Zacks Consensus Estimate of $4,522 million by 40.4%. The figure, however, declined 12.8% from $7,282 million recorded in the prior-year quarter.

Highlights of the Release

The company recorded adjusted EBITDA of $819 million, up 112.2% from the year-ago quarter’s figure of $386 million.

Total operating costs and expenses were $5,821 million, down 11.3% from $6,560 million in the year-ago quarter due to lower cost of operations.

Operating income totaled $530 million, down 29.7% from $754 million registered in the year-ago quarter. Our model predicted operating income of $567.4 million for the same quarter.

Financial Highlights

As of Jun 30, 2023, NRG had cash and cash equivalents worth $422 million compared with $430 million as on Dec 31, 2022.

As of Jun 30, 2023, long-term debt and finance leases amounted to $10,737 million compared with $7,976 million as on Dec 31, 2022.

Cash used by operating activities in the first six months of 2023 totaled $1,028 million against $3,189 million cash provided in the year-ago period.

Capital expenditures totaled $324 million in the first six months of 2023 compared with $150 million in the corresponding quarter of 2022.

Guidance

NRG Energy reaffirmed its 2023 adjusted EBITDA projection in the range of $3,010-$3,250 million.

The company expects cash provided by operating activities in the band of $1,610-$1,850 million.

NRG’s 2023 free cash flow before growth investment is anticipated between $1,620 million and $1,860 million.

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How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

The consensus estimate has shifted -6.42% due to these changes.

VGM Scores

At this time, NRG has a strong 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 second quintile 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.

Outlook

NRG has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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