NRG Energy Inc’s (NYSE:NRG): NRG Energy, Inc., together with its subsidiaries, operates as an integrated power company in the United States. The US$9.77b market-cap company’s loss lessens since it announced a -US$1.36b bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -US$956.00m, as it approaches breakeven. The most pressing concern for investors is NRG’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for NRG, its year of breakeven and its implied growth rate.
Check out our latest analysis for NRG Energy
Expectation from Renewable Energy analysts is NRG is on the verge of breakeven.
They expect the company to post a final loss in 2017, before turning a profit of US$1.03b in 2018.
So, NRG is predicted to breakeven approximately
a few months from now.
What rate will NRG have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of -9.78%,
I’m not going to go through company-specific developments for NRG given that this is a high-level summary, but, keep in mind that generally periods of lower growth in the upcoming years is not out of the ordinary, particularly when a company is in a period of investment.
Before I wrap up, there’s one issue worth mentioning. NRG currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and NRG has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
Next Steps:
There are key fundamentals of NRG which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at NRG, take a look at NRG’s company page on Simply Wall St. I’ve also put together a list of pertinent aspects you should further examine:
- Valuation: What is NRG worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether NRG is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on NRG Energy’s board and the CEO’s back ground.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.