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1. Company Snapshot

1.a. Company Description

NRG Energy, Inc., together with its subsidiaries, operates as an integrated power company in the United States.It operates through Texas, East, and West.The company is involved in the producing, selling, and delivering electricity and related products and services to approximately 6 million residential, commercial, industrial, and wholesale customers.


It generates electricity using natural gas, coal, oil, solar, nuclear, and battery storage.The company also provides system power, distributed generation, renewable products, backup generation, storage and distributed solar, demand response, and energy efficiency, and advisory services, as well as carbon management and specialty services; and on-site energy solutions.In addition, it trades in electric power, natural gas, and related commodities; environmental products; weather products; and financial products, including forwards, futures, options, and swaps.


Further, the company procures fuels; provides transportation services; and directly sells energy, services, and products and services to retail customers under the NRG, Reliant, Direct Energy, Green Mountain Energy, Stream, and XOOM Energy.As of December 31, 2021, it owns and leases power generation portfolio with approximately 18,000 megawatts of capacity at 25 plants.NRG Energy, Inc.


was founded in 1989 and is headquartered in Houston, Texas.

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1.b. Last Insights on NRG

NRG Energy's recent performance was driven by strong growth prospects, fueled by increasing power demand in Texas, particularly from data centers and smart home adoption. The company's strategic acquisitions, such as the LS Power deal, have expanded its portfolio and positioned it for AI-driven demand. Additionally, NRG's robust cash flow generation supports growth projects and aggressive buybacks, enhancing shareholder value. With a solid growth outlook and improving margins, the company's topline is expected to benefit from these trends, driving future growth.

1.c. Company Highlights

2. NRG's Strong Q3 Earnings Exceed Expectations

NRG reported a robust financial performance in the third quarter, with adjusted earnings per share (EPS) of $2.78, significantly beating analyst estimates of $1.99. The company's adjusted EBITDA reached $1.205 billion, a 14% increase from the same quarter last year. Revenue growth was also impressive, driven by strong performance across both Energy and Smart Home segments. The company's reaffirmation of its 2025 financial guidance and introduction of 2026 guidance, which aligns with its long-term growth targets, further bolstered investor confidence.

Publication Date: Nov -08

📋 Highlights
  • 2026 Financial Guidance: Introduced adjusted EBITDA range of $3.925B–$4.175B (midpoint $4.05B) and free cash flow before growth of $1.975B–$2.225B.
  • Data Center Expansion: Secured 445 MW contracted capacity with 5.4 GW pipeline, including 150 MW in Q3 above $70–$90/MWh pricing target.
  • Q3 Performance: Adjusted EPS rose 32% YoY to $2.78, while adjusted EBITDA hit record $1.205B, up 14% YoY.
  • Capital Returns: Approved $3B share repurchase program through 2028, alongside $1B annual buybacks and 7–9% dividend growth.
  • LS Power Acquisition: On track for Q1 2026 closure, expected to broaden earnings base and expand portfolio with 6 GW+ opportunities via partnerships.

Operational Highlights

NRG expanded its data center power agreements, bringing total contracted capacity to 445 megawatts, and rapidly grew its pipeline of potential projects under joint development and letters of intent to 5.4 gigawatts. The LS Power acquisition, expected to close in the first quarter of 2026, is anticipated to strengthen NRG's platform and broaden its earnings base. As Lawrence Coben mentioned, "we are excited about the process" of securing new data center agreements, with 2026 being a key year for announcements.

Valuation and Growth Prospects

With a current P/E Ratio of 23.1 and EV/EBITDA of 13.2, NRG's valuation appears reasonable, considering its growth prospects. Analysts estimate revenue growth of 18.1% next year, driven by the expansion of its data center portfolio and Texas energy projects. The company's commitment to its return of capital program, including share repurchases and dividend growth, is also expected to support its stock performance. The introduction of 2026 guidance, with adjusted EBITDA expected to reach $4.05 billion at the midpoint, provides a clear direction for the company's growth trajectory.

Segment Performance and Outlook

NRG's Smart Home business saw 9% year-over-year growth, with expectations of continued strong growth in 2026, driven by the introduction of a more affordable entry-level offering. The company's Energy segment also performed well, with a strong increase in data center power agreements. As NRG continues to expand its portfolio of reliable and flexible capacity, it is well-positioned to capitalize on the growing demand for energy and data center services.

Capital Allocation and Dividend Yield

NRG is guiding to a moderation of share buybacks to $1 billion in the next year, consistent with its previous announcement. The company's dividend yield currently stands at 1.02%, providing a relatively stable source of return for investors. With a Free Cash Flow Yield of 5.12%, NRG's stock appears attractive, considering its growth prospects and commitment to returning capital to shareholders.

3. NewsRoom

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ChatGPT Turns Three. 5 Stocks Which Have Soared in the AI Era and What Comes Next.

Dec -01

Source: barrons.com

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American Century Companies Inc. Boosts Stake in NRG Energy, Inc. $NRG

Nov -29

Source: defenseworld.net

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NRG vs. NEE: Which Utility Stock Is the Smarter Investment for Now?

Nov -25

Source: zacks.com

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Hims, Block, and NRG Just Launched Huge Stock Buybacks

Nov -24

Source: marketbeat.com

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NRG Outperforms Industry in a Year: Buy, Hold or Sell the Stock?

Nov -19

Source: zacks.com

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NRG Energy: Buy Into A Structurally Tight Power Market And Data Center Super-Cycle

Nov -19

Source: seekingalpha.com

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Banco Bilbao Vizcaya Argentaria S.A. Sells 5,616 Shares of NRG Energy, Inc. $NRG

Nov -19

Source: defenseworld.net

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NRG Energy Receives FERC & NYSPSC Approval for LS Power Portfolio Acquisition

Nov -18

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.00%)

6. Segments

East

Expected Growth: 1.8%

NRG Energy's 1.8% growth is driven by increasing demand for renewable energy, strategic acquisitions, and cost savings initiatives. The company's focus on clean energy solutions, such as wind and solar power, positions it for long-term growth. Additionally, NRG's efforts to reduce debt and improve operational efficiency have enhanced its financial flexibility, supporting future expansion.

Texas

Expected Growth: 2.2%

NRG Energy, Inc.'s 2.2% growth in Texas is driven by increasing demand for electricity, fueled by the state's rapid population growth and industrial expansion. Additionally, the company's focus on renewable energy sources, such as wind and solar power, has contributed to its growth in the region.

West/Services/Other

Expected Growth: 1.9%

NRG Energy's West/Services/Other segment growth of 1.9% is driven by increasing demand for renewable energy solutions, expansion of energy efficiency services, and strategic acquisitions. Additionally, the segment benefits from favorable regulatory policies and growing customer adoption of smart home technologies.

Vivint Smart Home

Expected Growth: 2.5%

Vivint Smart Home's 2.5% growth is driven by increasing adoption of smart home devices, rising energy efficiency concerns, and NRG Energy's strategic expansion into the smart home market. Additionally, Vivint's subscription-based model and partnerships with major retailers contribute to its growth, as consumers seek convenient and cost-effective home automation solutions.

Eliminations

Expected Growth: 0.0%

NRG Energy, Inc.'s eliminations segment shows 0.0% growth, driven by stagnant wholesale market conditions, flat demand, and lack of new projects. Additionally, increased competition and regulatory pressures have limited opportunities for expansion, resulting in a flat growth rate.

7. Detailed Products

Retail Electricity

NRG Energy, Inc. offers retail electricity plans to residential and commercial customers, providing them with competitive pricing and flexible contract terms.

Renewable Energy Certificates (RECs)

NRG Energy, Inc. offers Renewable Energy Certificates (RECs) to customers, allowing them to support renewable energy generation and reduce their carbon footprint.

Demand Response

NRG Energy, Inc. provides demand response services, helping commercial and industrial customers reduce their energy consumption during peak periods.

Energy Efficiency Solutions

NRG Energy, Inc. offers energy efficiency solutions, including energy audits, retrofits, and energy management systems, to help customers reduce their energy consumption.

Solar and Renewable Energy Solutions

NRG Energy, Inc. provides solar and renewable energy solutions, including solar panels and energy storage systems, to residential and commercial customers.

8. NRG Energy, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

NRG Energy, Inc. operates in the energy industry, where substitutes are limited. However, the increasing adoption of renewable energy sources and energy-efficient technologies poses a moderate threat to the company's operations.

Bargaining Power Of Customers

NRG Energy, Inc. serves a large customer base, which reduces the bargaining power of individual customers. Additionally, the company's diversified customer portfolio and long-term contracts further mitigate the bargaining power of customers.

Bargaining Power Of Suppliers

NRG Energy, Inc. relies on various suppliers for fuel, equipment, and services. While the company has some bargaining power due to its scale, suppliers of critical components may still exert some pressure on prices and delivery terms.

Threat Of New Entrants

The energy industry has high barriers to entry, including significant capital requirements, regulatory hurdles, and complexity of operations. These barriers limit the threat of new entrants to NRG Energy, Inc.'s business.

Intensity Of Rivalry

The energy industry is highly competitive, with many established players competing for market share. NRG Energy, Inc. faces intense rivalry from other energy companies, which can lead to pricing pressure and increased marketing expenses.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 79.06%
Debt Cost 6.41%
Equity Weight 20.94%
Equity Cost 9.42%
WACC 7.04%
Leverage 377.53%

11. Quality Control: NRG Energy, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Otter Tail

A-Score: 6.6/10

Value: 5.3

Growth: 7.0

Quality: 6.5

Yield: 6.0

Momentum: 6.0

Volatility: 8.7

1-Year Total Return ->

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Stock-Card
Capital Power

A-Score: 6.6/10

Value: 4.7

Growth: 6.3

Quality: 3.1

Yield: 9.0

Momentum: 8.5

Volatility: 7.7

1-Year Total Return ->

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Entergy

A-Score: 6.5/10

Value: 4.8

Growth: 3.6

Quality: 4.7

Yield: 7.0

Momentum: 9.0

Volatility: 10.0

1-Year Total Return ->

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ALLETE

A-Score: 6.4/10

Value: 5.9

Growth: 4.0

Quality: 4.3

Yield: 8.0

Momentum: 6.0

Volatility: 10.0

1-Year Total Return ->

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NiSource

A-Score: 6.3/10

Value: 5.0

Growth: 3.3

Quality: 4.7

Yield: 6.0

Momentum: 8.5

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
NRG Energy

A-Score: 5.1/10

Value: 2.5

Growth: 6.8

Quality: 3.7

Yield: 4.0

Momentum: 9.5

Volatility: 4.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

163.0$

Current Price

163$

Potential

-0.00%

Expected Cash-Flows