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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Nrg Energy, Inc. (XNYS:NRG) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
NRG
Name:
NRG ENERGY, INC. (XNYS:NRG)
Sector:
1.60B
Industry:
Utilities�Independent Power Producers
CEO:
Mr. Mauricio Gutierrez
Total Employees:
6,635
Our Technological Advancement Rating
Our Rating:
B
Technological advancement compared to industry is 0.00% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF NRG ENERGY, INC.(NRG) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND UTILITIES�INDEPENDENT POWER PRODUCERS INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
41.47
One Month Price Target:
$41.66
Six Month Price Target :
$42.62
Likely Price in One Year's Time:
Ticker:
$43.78
Likely Trading Range Today Under (Normal Volatility)
$41.31
Price Upper limit ($) :
$41.67
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$39.32
This week:
$36.66
This month :
$31.85
Other Primary facts
Market Cap:
9.59B
Market Cap Classification:
Mid Cap
Number of Shares
IPO Date:
235.15M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
16.25%
-16.71%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$51.46
$46.88
$31.48
$36.06
Medium risk (<10%) entry points
Buy Call
Sell Call
$45.39
Buy Put:
Sell Put:
$44.41
$37.54
$38.53
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
NRG
Sharpe Ratio:
1.30%
Comparison:
NRG, is amongst the top 60% stocks with highest risk-adjusted returns
Sharpe ratio is -0.66% lower than the industry
& is -43.02% lower than the market/S&P 500 average
Average Returns/Yield of
NRG
Daily returns:
0.04%
Weekly returns:
0.21%
Monthly returns:
0.84%
Yearly returns:
10.42%
Comparison of returns:
Average annual returns/yield (last 3 years) is -3.46% below industry average
Classification:
NRG, is amongst the top 60% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.98
Statistical test of Returns:
NRG has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.55%
Weekly Volatility:
5.69%
Monthly Volatility:
11.39%
Yearly Volatility:
39.45%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.80%
Volatility in last five trading days has been -68.44% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-5.19%
Weekly VaR:
-11.60%
Monthly VaR:
-23.20%
How Much Can the price of
NRG
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-20%
Worst case (decline):
-80.38%
This translates to price declining to:
$33.16
This translates to price declining to:
$8.14
Severe Crash Probability
Risk of crash in next 6/12 months: Medium (<50%)
What is Value at Risk (VaR)?
Risk Fundamentals
NRG is a 63.77% riskier investment compared to the market/S&P 500 & is 40.30% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -3.68% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
NRG
Beta in relation to market/S&P 500--0.83
Expected beta in 1 year's time:
0.658
Expected beta in 3 year's time:
0.931
Unlevered (debt free) Beta:
0.371
Beta in relation to Nasdaq (XNAS):
0.69
Beta in relation to all global stocks::
0.708
Beta Comparison & Analysis
Beta of competitors/peers::
0.751
Beta is 10.08% higher than peers
Average Industry Beta:
0.865
Beta is -4.39% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
86.22%
Sustainable growth rate is 0.00% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.012
Alpha is -7.42% below industry average alpha yield
Alpha is 79% compared to market & is healthy
Analysis of Cost of Capital of
NRG
Equity cost of capital:
0.088
Equity cost of capital is -2.87% below industry mean WACC
Unlevered (without debt) cost of capital:
3.95%
Before-tax cost of debt:
5.53%
After-tax cost of debt:
4.37%
Overall debt rating:
Lower BB medium grade (Fifth highest grade)
Weighted average cost of capital (WACC):
4.37%
WACC is 2.22% above industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$113.95
Revenue growth rate per share of (3Y):
1.94
Annual revenue growth rate is 74.83% above the industry average
EPS:
$16.43
Expected Annual growth rate of EPS (3Y):
-19.22%
Expected future EPS growth rate is 0.00% lower than the Utilities�Independent Power Producers industry
Free cash flow (FCF) per share:
$11.40
Balance sheet equity growth per share: 969.78%
Equity growth rate per share is 100.00% higher than the industry
Debt per share
$35.07
EBITDA per share
$28.68
Valuation Analysis Today of
NRG
P/E Ratio:
2.92
P/E Ratio of Competitors/Peers:
18.95
P/E ratio is -84.59% lower than main peers & is -31.72% lower than the industry
Stock price/value with industry average P/E ratio: $70.27
NRG is -40.99% undervalued if valued using industry average P/E ratio
-
-
P/S (Price to Sales ratio):
0.36
Price to sales ratio is -42.84% below the industry mean
P/B (Price to book value ratio):
1.94
Price to free cash flow: 3.64
FALSE
Net income growth rate (3Y):
912.56%
Net income growth rate is -43.85% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 2.12%
Dividend yeild: 3.26%
Previous Dividend: $0.35
Previous adjusted dividend: $0.35
Previous Dividend: $1.35
Expected next dividend best case: $0.42
Expected next dividend worst case: $0.28
Average dividend payment (long-term): $0.29
Average dividend increase/decrease (growth rate) % per period: 91.60%
Expected next dividend payment date: 15/08/2022
Expected next dividend record date: 08/01/2022
Expected next dividend declaration date: 19/07/2022
Previous dividend payment date: 16/05/2022
Previous dividend record date: 05/02/2022
Previous dividend declaration date: 20/04/2022
Dividend History:
2022-04-29--$0.35
2021-10-29--$0.33
2021-04-30--$0.33
2022-01-31--$0.35
2021-07-30--$0.33
2021-01-29--$0.33
Dividend growth rate is 2151.83% higher than the average industry
In-depth Debt & Leverage Analysis
Debt to equity ratio:
163.94%
Net debt to equity ratio:
157.95%
Debt to assets ratio:
27.97%
Net debt to assets ratio:
26.95%
Debt-to-asset ratio is -66.15% below industry average
Ability to repay debt:
Interest coverage ratio:
14.63
Interest coverage ratio is 561.52% more than industry average
Looking forward:
Debt growth rate:
0.00%
-
Debt repayment rate in last quarter: 0.01%
Analysis of Key Statistics
Correlation of price movement with the market:
0.586
Statistical significance of correlation:
NRG has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.552
Stock price is 6.09% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.552
Correlation of price movement with Nasdaq (^IXIC):
0.03
Covariance of price movement with the market:
0.044
Kurtosis
8.567
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
-0.358
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
NRG
Gross Profit Margin Ratio:
126%
Operating Profit Margin Ratio:
21.73%
Operating profit margin is -723.30% lower than the industry
Net Profit Margin Ratio:
126%
Effective Tax Rate:
24.90%
Effective tax rate is -28.11% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
79.62%
Return on equity (ROE) is 131.70% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
13.59%
Return on assets (ROA) is 1322.72% higher than the industry
Financial Leverage:
1.4x
Current Ratio:
1.38
Current ratio is 24.91% above industry average
Cash Conversion Cycle (days):
25.4
Cash conversion cycle is -28.61% below industry average
The remaining useful life of property plant & equipment is: 2.7 years
Stock based compensation to net income ratio:
0.15%
In-depth Efficiency Analysis
Revenue generated per employee:
4.0M
Each employee generates 26% more revenue than industry average revenue per employee
EBITDA generated per employee:
1.0M
Each employee generates 27% more EBITDA than industry average revenue per employee
Profit generated per employee:
603.6K
Each employee generates 73% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
240.8K
Each employee generates 70% more free cash flow than industry average revenue per employee
Assets/Capital per employee
1.9M
Each employee generates 70% more free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
Research & development (R&D) investment growth rate-- -100.00%
Growth rate in R&D investment/expenditure is -120.62% lower than the industry
Competitors/Peer firms of
NRG
Algonquin Power & Utilities Corp. (XNYS:AQN)
Biomass Energy Project S.A. (XWAR:BEP)
UGI CORPORATION (XNYS:UGI)
NISOURCE INC. (XNYS:NI)
VISTRA CORP. (XNYS:VST)
HUANENG POWER INTERNATIONAL, INC. (OTCM:HNPIY)
NI-PB
BRAZILIAN ELECTRIC POWER COMPANY (XNYS:EBR)
EBR-B
Current Analyst Ratings
Strong buy�17%
Buy�17%
Hold�4%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Strong buy
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
26.79B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
18.57B
8.23B
-
-
1.27B
-
763.00M
2.03B
-
461.00M
949.00M
6.74B
5.82B
4.01B
5.33B
1.33B
4.01B
Statement of Cash Flow
Date:
Period:
344.00M
Differed Income Tax :
-
Stock Based Compensation :
6.00M
Change in Working Capital :
- 460000.00K
Accounts Receivables:
-
Other Working Capital:
- 460000.00K
Other Non-Cash Items:
50.00M
Net Cash Provided by Operating Activities:
1.68B
Investments in PP&E:
-
Net Acquisitions:
- 26000.00K
Purchases of Investments:
- 151000.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
387.00M
-
387.00M
3.98B
354.00M
12.12B
16.84B
1.90B
1.80B
2.39B
1.10B
1.64B
3.82B
12.64B
-
29.48B
2.22B
86.00M
-
-
9.93B
12.23B
8.25B
3.90B
12.21B
-
24.45B
4.00M
2.17B
- 118000.0K
-
March 31, 2022 at 6:00:00 AM
20.60B
5.03B
29.48B
-
8.33B
7.9B
161.00M
- 64000.00K
- 80000.00K
- 1000.00K
-
- 188000.00K
- 85000.00K
561.00M
287.00M
3.00M
1.89B
3.00B
1.11B
1.68B
- 78000.00K
1.60B
Our Proprietary Portfolio Rating
Our Rating:
B
Price Forecast/Expected Price in Next 5 Years of
NRG
2023
2024
2025
2026
2027
$44.00
$105.50
$111.36
$117.55
$124.09