NRG Energy Touches 52-Week High - Analyst Blog
May 21 2013 - 10:10AM
Zacks
On May 20, 2013, shares of
NRG Energy Inc. (NRG) climbed to a 52-week high of
$28.34. A string of high-end investments in solar generation and
the acquisition of GenOn Energy primarily lifted the company’s
stock to a new high.
NRG Energy boasted of four major
solar installations – the Avra Valley Solar Photovoltaic Facility
and Agua Caliente Project in Ariz. as well as the California Valley
Solar Ranch and Alpine Solar Generating Facility in Calif. – which
came into service in 2012.
Meanwhile, the company received contract extensions last year from
its clients Houston Technology Center and Washington-based St.
Tammany Electric and Claiborne Electric cooperatives for delivery
of power services. In addition, the company clinched two new
long-term power supply commitments with Comcast and the city of
Houston. We believe these contracts will ensure a stable earnings
stream.
NRG Energy’s disciplined step to
curb emission is evident from its continued pro-environment work on
the Big Cajun generating facility in Louisiana. These initiatives
enabled NRG Energy to perform well despite the challenges presented
by the energy market last year.
With the renewable market dynamics becoming more favorable in the
U.S., the company’s unrelenting pursuit of options to expand its
solar portfolio will certainly prove to be a key growth driver.
In early 2013, NRG Energy successfully brought online its
large-scale 720 megawatt Marsh Landing Generating Station in
Antioch as well as the Borrego I Solar Generating Station. Also, it
acquired a Gregory cogeneration plant in Corpus Christi, Texas, in
agreement with Atlantic Power Corporation, John Hancock Life
Insurance Company and Rockland Capital, LLC.
The current valuation also makes the shares of NRG Energy
attractive. The forward price/earnings (P/E) multiple of 29.4x is
higher than the peer group average of 17.4x, reflecting a premium
of 69%. The Zacks Consensus Estimate for 2013 represents a
projected increase of 138.7% to 95 cents from year-ago earnings of
40 cents.
Besides NRG Energy, utility stocks that are performing well and
hold a Zacks Rank #2 (Buy) include ALLETE Inc.
(ALE), Sempra Energy (SRE) and Entergy
Corporation (ETR).
Headquartered in Princeton, N.J., NRG Energy together with its
subsidiaries operates as an integrated wholesale power generation
and retail electricity company.
ALLETE INC (ALE): Free Stock Analysis Report
ENTERGY CORP (ETR): Free Stock Analysis Report
NRG ENERGY INC (NRG): Free Stock Analysis Report
SEMPRA ENERGY (SRE): Free Stock Analysis Report
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