Does NRG Energy Inc. (NRG) offer a good opportunity for investors?

NRG Energy Inc. (NYSE: NRG) stock jumped 4.74% on Friday to $39.14 against a previous-day closing price of $37.37. With 4.19 million shares changed hands, the volume of the stock remained heavier than its average volume of 3.9 million shares. During the session, the Utilities – Independent Power Producers company that operates in wider Utilities sector, reached to the highest price of $39.63 whereas the lowest price it dropped to was $37.69. The 52-week range on NRG shows that it touched its highest point at $47.82 and its lowest point at $34.70 during that stretch. It currently has a 1-year price target of $44.18. With its current market cap of 8.97 billion, NRG has annualized dividend of $1.40 while the current yield stands at 3.58%. Beta for the stock currently stands at 0.88.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of NRG was up-trending over the past week, with a rise of 4.35%, but this was up by 4.93% over a month. Three-month performance surged to 2.33% while six-month performance fell -1.86%. The stock lost -6.23% in the past year, while it has lost -9.15% so far this year. A look at the trailing 12-month EPS for NRG yields 16.43 with Next year EPS estimates of 4.32. For the next quarter, that number is 0.65. This implies an EPS growth rate of 330.60% for this year and 20.41% for next year. EPS is expected to grow by 37.90% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of 41.50%.

Float and Shares Shorts:

At present, 242.00 million NRG shares are outstanding with a float of 235.18 million shares on hand for trading. On Jul 14, 2022, short shares totaled 15.94 million, which was 6.72% higher than short shares on Jun 14, 2022. In addition to Mr. Mauricio Gutierrez as the firm’s Pres, CEO & Director, Mr. Alberto Fornaro serves as its Exec. VP & CFO.

Institutional Ownership:

Through their ownership of 98.73% of NRG’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 7.88% of NRG, in contrast to 62.45% held by mutual funds. Shares owned by individuals account for 35.72%. As the largest shareholder in NRG with 12.50% of the stake, The Vanguard Group, Inc. holds 29,668,732 shares worth 29,668,732. A second-largest stockholder of NRG, Pzena Investment Management LLC, holds 18,654,573 shares, controlling over 7.86% of the firm’s shares. BlackRock Fund Advisors is the third largest shareholder in NRG, holding 18,483,774 shares or 7.79% stake. With a 2.95% stake in NRG, the Vanguard Total Stock Market Index is the largest stakeholder. A total of 7,002,553 shares are owned by the mutual fund manager. The iShares Tr. – Edge MSCI USA Quali, which owns about 2.82% of NRG stock, is the second-largest Mutual Fund holder. It holds 6,691,288 shares valued at 255.41 million. Putnam Large Cap Value Fund holds 2.77% of the stake in NRG, owning 6,572,285 shares worth 250.86 million.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for NRG since 11 analysts follow the stock currently. There are 4 analysts who recommend BUY ratings, while 0 suggest SELL ratings. Of the remaining analysts, 6 believe that the stock is worth HOLDING, 0 give it an OVERWEIGHT rating, and 1 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With NRG analysts setting a high price target of $52.00 and a low target of $35.00, the average target price over the next 12 months is $43.56. Based on these targets, NRG could surge 32.86% to reach the target high and fall by -10.58% to reach the target low. Reaching the average price target will result in a growth of 11.29% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. NRG will report FY 2022 earnings on 03/02/2023. Analysts have provided yearly estimates in a range of $10.40 being high and $2.80 being low. For NRG, this leads to a yearly average estimate of $7.28. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. NRG Energy Inc. surprised analysts by $6.57 when it reported $7.17 EPS against a consensus estimate of $0.60. The surprise factor in the prior quarter was -$2.76. Based on analyst estimates, the high estimate for the next quarter is $0.43 and the low estimate is $0.02. The average estimate for the next quarter is thus $0.25.

Summary of Insider Activity:

Insiders traded NRG stock several times over the past three months with 10 Buys and 1 Sells. In these transactions, 42,594 shares were bought while 858 shares were sold. The number of buy transactions has increased to 78 while that of sell transactions has risen to 26 over the past year. The total number of shares bought during that period was 305,706 while 133,901 shares were sold.

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