NRG Energy (NRG) Tops On Q3 Earnings, Trims 2016 Outlook

NRG Energy, Inc. (NYSE:NRG) reported earnings of $1.27 in the third quarter of 2016, surpassing the Zacks Consensus Estimate of 94 cents by 35.1%. Reported earnings were also up substantially from the year-ago quarter figure of 18 cents.

Revenues

NRG Energy's quarterly operating revenues of $3,952 million lagged the Zacks Consensus Estimate of $4,374 million by 9.6% and were down 10.9% from $4,434 million reported in the third quarter of 2015.

Highlights of the Release

Total operating costs and expenses in the quarter declined 14.6% to $2,468 million from $3,463 million a year ago, primarily due to lower cost of operations, and a reduction in selling, general and administrative expenses.

The company’s operating income was $755 million in the third quarter of 2016, up 99.2% from $379 million a year ago.

The company incurred interest expenses of $280 million in the quarter, down 3.8% from $291 million a year ago.

As of Nov 4, 2016, the company has reduced its corporate debt by $777 million. Combined with the debt repurchases in 2015 and the extension of debt maturities at a lower average coupon rate, NRG Energy has retired $1.0 billion of corporate debt, resulting in annual interest savings of approximately $78 million.

Financial Condition

As of Sep 30, 2016, NRG Energy had cash and cash equivalents of $2,435 million, compared with $1,518 million as of Dec 31, 2015.

The company’s long-term debt and capital leases (excluding current portion) were $18,018 million as of Sep 30, 2016, compared with $18,983 million as of Dec 31, 2015.

In the first nine months of 2016, NRG Energy’s net cash from operating activities was $1,733 million, up 24.5% from $1,392 million in the prior-year period.

Capital expenditure in the first nine months of 2016 was $898 million, up 1% from $889 million in the year-ago period.

Guidance

For 2016, NRG Energy has narrowed its adjusted EBITDA and free cash flow (before growth investments) guidance to the range of $3,250–$3,350 million and $1,100–$1,200 million from its prior expectations of $3,000–$3,200 million and $1,000–$1,200 million, respectively.

For 2017, NRG Energy provided its adjusted EBITDA and free cash flow (before growth investments) guidance in the ranges of $2,700–$2,900 million and $800–$1,000 million, respectively.

Other Utility Releases

NiSource Inc. (NYSE:NI) reported third-quarter 2016 operating earnings of 6 cents per share, missing the Zacks Consensus Estimate of 8 cents by a wide 25%.

NextEra Energy, Inc. (NYSE:NEE) reported third-quarter 2016 adjusted earnings of $1.74 per share, outpacing the Zacks Consensus Estimate of $1.65 by 5.5%.

Xcel Energy Inc. (NYSE:XEL) recorded third-quarter operating earnings of 90 cents per share, outpacing the Zacks Consensus Estimate of 87 cents by 3.5%.

Zacks Rank

NRG Energy currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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