As Power Markets Improve, NRG Energy Can Better Leverage Its Assets
Stephen Simpson, CFA
Stephen Simpson, CFA
Thu, Jun. 9, 12:29 PM
- NRG Energy (NRG -7.5%) is downgraded to Sell from Buy with a $16 price target at UBS, which says the stock's risk and reward "skews negatively" following the near doubling off January lows.
- "NRG and peers have rallied as part of a bullish gas thesis, but we think the market is overlooking the $285M decrease in PJM capacity revenue and the potential for continued weakness in PJM, which represents 33% of capacity,” UBS writes.
- Despite NRG’s strong performance YTD, 2019 ATC power prices are roughly flat in its core markets and the recent PJM capacity auction came in solidly below expectations, and UBS notes that PJM deterioration is particularly negative for NRG as it looks to negotiate with creditors of its GenOn subsidiary.
Tue, May 24, 5:58 PM
- NRG Energy (NYSE:NRG), Dynegy (NYSE:DYN) and FirstEnergy (NYSE:FE) are lower AH by -3%, -1.5% and -0.3% respectively following the results of PJM Interconnection's latest auction.
- PJM says its "second auction with stringent pay-for-performance standards attracted a significant amount of new resources at competitive prices to the PJM footprint," as it procured ~167.3K MW in the auction to ensure electricity capacity for the June 2019-May 2020 delivery year; the clearing price was $100/MW-day for the majority of the 13-state PJM region vs. the $164.77 rate set during last year's auction.
- Prices were lower than some analysts had expected and lower than last year's auction results due to market fundamentals of changes in supply and demand, PJM says.
Fri, May 6, 12:21 PM
- NRG Energy (NRG +3.5%) is higher for a second straight day after reporting stronger than expected Q1 earnings and revealing plans to trim involvement in two of its alternative energy ventures as it seeks to cut costs and streamline operations.
- NRG says it will sell a majority stake in its EVgo electric vehicle charging business, and its home solar division will sell the future customer agreements it originates to two partners, Sunrun (NASDAQ:RUN) and Spruce, once the systems are up and running.
- The approach will allow the residential solar business to break even by next year, NRG CEO Mauricio Gutierrez said in yesterday's earnings conference call.
- The CEO said the home solar unit will for now focus on three markets where it is already active - New York, New Jersey and Massachusetts - but will look to offer rooftop arrays to the residential customers it serves in Texas when the economics are more viable.
- Now read NRG Energy is a unique company offering both a high yield and growth
Mon, Feb. 29, 9:19 AM
- NRG Energy (NYSE:NRG) -4.2% premarket after reporting a Q4 loss and announcing a 79% cut in its annual dividend to $0.12/share from $0.58, which it says will provide the company with an extra $145M/year.
- NRG's Q4 loss totaled $6.4B, primarily from writedowns including the loss of value of its struggling Texas coal plants; Q4 EBITDA fell 5.4% Y/Y to $625M, which NRG says shows it is still operating very efficiently.
- NRG says it is reincorporating its NRG Renew solar business for commercial and industrial customers back into NRG, but still plans to spin off or sell much of its stake in its home solar and electric vehicle charging businesses in the spring as previously planned.
Mon, Jan. 25, 11:18 AM
- EnerNOC (ENOC +53.1%) surges more than 50% after the U.S. Supreme Court upholds a federal rule that pays large users to conserve power.
- The Court says the FERC acted within its authority with its Demand Response Rule, which helps large consumers reduce their power use.
- "This case has been an overhang for the industry of demand response for a number of years, so to have a final resolution at the highest court in the land is a huge victory," ENOC President David Brewster tells Bloomberg.
- U.S. power producers that sell into competitive markets such as include NRG Energy (NRG -6.7%), Exelon (EXC -2.1%), Dynegy (DYN -9.1%), Calpine (CPN -5.7%) and American Electric Power (AEP -0.9%) would have benefited if the rule was eliminated.
Tue, Jan. 12, 3:02 PM
- Morgan Stanley upgrades the regulated utilities industry to In-Line from Cautious, believing the market will better differentiate high-growth names from others in 2016 and that the valuation gap between undervalued public companies and overvalued private companies will begin to close.
- The firm names Dynegy (DYN -2.7%) its top overall pick in the space, but also remains Overweight on NRG Energy (NRG -2.7%) and Calpine (CPN -4.5%), while maintaining its Underweight rating on Consolidated Edison (ED -1.5%), Southern Co. (SO -0.9%) and Public Service Enterprise (PEG -0.5%).
- Stanley also downgrades Laclede (LG -1.9%) and Pinnacle West (PNW -2.4%) to Underweight from Equal Weight.
Dec. 16, 2015, 5:38 PM
Dec. 10, 2015, 5:36 PM
Dec. 9, 2015, 5:40 PM
Dec. 4, 2015, 12:44 PM
Dec. 3, 2015, 8:43 AM
- NRG Energy (NYSE:NRG) +2% premarket on news that President and CEO David Crane is resigning, effective immediately, to be replaced Mauricio Gutierrez.
- Crane has led NRG since 2003; no reason is given for his departure.
- Gutierrez has served as executive VP and COO since 2010 and has been with the company in various roles since 2004.
- NRG shares are down ~60% YTD.
Sep. 18, 2015, 11:18 AM
- NRG Energy (NRG -3.6%) unveils several moves to reduce debt, buy back shares and raise cash through an asset sale, as it faces pressure over its expensive clean energy businesses.
- In an investor presentation, NRG says it plans to spend $1.3B on reducing debt and buying back shares through 2016, including $250M in share repurchases this year, and plans to cut $150M in costs starting next year.
- NRG says it will form a “GreenCo” consisting of its money-losing home solar business, its renewable assets and its electric vehicle charging business; it plans to limit its financial commitment to GreenCo to $125M starting Jan. 1, hoping the business will be self-sufficient.
- Separately, NRG will drop down a 75% stake in its portfolio of wind farms to its NRG Yield (NYLD +2.4%) affiliate company for $210M.
- NRG has been the worst performing member of the S&P 500 Utilities Index this year, -31.3% YTD, as its corporate structure has grown complex and its balance sheet bloated while its green businesses have been expensive.
Aug. 4, 2015, 2:27 PM
- NRG Energy (NRG -10.5%) and NRG Yield (NYLD -13.7%) are sharply lower after reporting disappointing Q2 results (I, II), with earnings and revenues well below expectations; NYLD also lowered forward guidance, citing low wind production and fewer residential solar leases.
- NYLD cut guidance for 2015 adjusted EBITDA to $660M from $690M and 2015 cash available for distribution to $160M from $195M, while also making the "surprising assertion" that it does not expect the change to have any effect on its current dividend or long-term dividend growth.
- NYLD says it is targeting a $0.25/share quarterly dividend by Q4 2016, a 19% increase over the current rate and a 67% increase since its first post-IPO dividend in Q4 2013.
Jun. 10, 2015, 9:57 AM
- PJM Interconnection, the largest U.S. electricity grid, wins approval from U.S. regulators for a plan to increase reliability at power plants and avoid a repeat of the shutdowns and price spikes during the unseasonably cold winter of 2014.
- Under the plan, which takes effect in 2018 after a capacity auction this year, generators that promise to be available during peak demand periods will receive higher payouts than other plants and will be penalized for failing to meet the commitments; the auction, planned for May, was delayed after FERC declined PJM’s initial proposal and asked for more information.
- The largest generators in PJM are trading higher at the open: NRG +4.2%, AEP +1.4%, EXC +3.1%, PEG +1.1%, DYN +7.2%.
- Also: TLN +4%, NEE +1.2%, PCG +0.7%, EE +1.5%, SO +0.5%, D +0.2%, DUK +0.9%, XLU +0.9%.
May 26, 2015, 10:55 AM
- NRG Yield (NYLD +2.4%) is added to the Best Ideas List at Morgan Stanley following the recent decline in the share price, maintaining an Overweight rating and $32 price target.
- NYLD has plunged nearly 4% this month vs. an average ~5% gain in peer yieldcos, a divergence that has not been driven by any fundamental business changes but by confusion about the recent recap, the firm says.
- Stanely believes NYLD's fundamentals, which are driven by the growth in U.S. renewables, remain robust and will drive a projected 17% 2015-19 dividend compound annual growth rate.
- NRG -2.1%.
Apr. 1, 2015, 12:26 PM
- Dynegy (DYN -2.1%) and NRG Energy (NRG -5.6%) are sharply lower after the FERC declined to approve a capacity performance plan submitted by the PJM Interconnection consortium and asked for answers to additional questions about the initiative.
- PJM operates a wholesale electricity market in the eastern U.S.; DYN is involved in the PJM and is looking to boost its share within the Regional Transmission Organization with proposed asset purchases, and a small part of NRG's capacity is within PJM.
- Deutsche Bank analyst Jonathan Arnold notes that FERC did not reject the proposal, but says FERC's action prolongs uncertainty for investors in the electric utilities that belong to PJM, which also include Exelon (EXC -1.8%), Public Service Enterprise (PEG -1.9%), American Electric (AEP +0.2%), PPL (PPL -0.4%) and FirstEnergy (FE -1.3%).
NRG Energy, Inc. is an energy company. The company produces, sells and delivers energy products and services in competitive power markets in the U.S. Its wholesale operations include plant operations, commercial operations, EPC, energy services and other critical related functions. The Company's... More
Industry: Electric Utilities
Country: United States
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