Company Reports

We are reaffirming our fair value estimates and economic moat ratings for US utilities after executives at the Electric Reliability Council of Texas on Tuesday forecast an extraordinary jump in electricity demand in the state during the next five years.

NRG Energy has reconfigured its business, its management team, and its board of directors in the last few years. Once one of the largest power generators based mostly in Texas, NRG now is a nationwide retail energy and home services company.

We are reaffirming our $38 per share fair value estimate for NRG Energy after the company announced $3.3 billion of earnings before interest, taxes, depreciation, and amortization in 2023. This is slightly higher than our estimate and at the high end of management's revised guidance in November. We are keeping our no-moat rating and High Morningstar Uncertainty Rating.

We are reaffirming our $38 per share fair value estimate for NRG Energy after reviewing the outlook for this winter in the Texas power markets.

We are reaffirming our $38 per share fair value estimate for NRG Energy after the company announced CEO Mauricio Gutierrez has resigned among other management changes. We are reaffirming our no-moat rating and High Morningstar Uncertainty Rating.

NRG Energy has reconfigured its business, its management team, and its board of directors in the last few years. Once one of the largest power generators based mostly in Texas, NRG now is a nationwide retail energy and home services company.

NRG Energy has reconfigured its business in the last few years. Once one of the largest power generators based mostly in Texas, NRG now is a nationwide retail energy and home services company.

We plan to raise our fair value estimate for NRG Energy by about 5% after it announced impressive third-quarter results and a 2024 outlook that slightly exceeds our forecast. We are reaffirming our no-moat rating and High Morningstar Uncertainty Rating.

We are reaffirming our fair value estimates of $37 per share for NRG Energy and $26 per share for Vistra after a month of tight supply/demand conditions on the Texas power grid. We are also reaffirming our no-moat and High Uncertainty Ratings for both companies.

We are reaffirming our $37 fair value estimate for NRG Energy after the company announced $819 million of adjusted EBITDA in the second quarter, up from $386 million in the year-ago quarter after adjusting for power plant retirements in 2022. We are reaffirming our no-moat rating and High Morningstar Uncertainty Rating.

We are reaffirming our $37 fair value estimate for NRG Energy after activist investor Elliott Management published a letter deriding the strategy NRG management detailed at the company's investor day on June 22. At the same time, hot weather in NRG's core Texas market should boost earnings this year, masking any near-term performance shortfalls.

NRG Energy is no longer the business it used to be just a few years ago. Following its $5.2 billion Vivint Smart Home acquisition in March 2023, NRG is predominantly a nationwide retail energy supplier and home services business, a strategic flip from its legacy as a Texas-based power generator. We estimate NRG's legacy power generation business will represent about 20% of consolidated earnings once it integrates Vivint.

We are reaffirming our $37 fair value estimate for NRG Energy after management reiterated its commitment to a strategy that focuses on retail energy and home services while shrinking the legacy power generation business.

We are reaffirming our $37 fair value estimate for NRG Energy after the company announced it is selling its 44% interest in the South Texas Project nuclear plant for $1.75 billion and replacing its CFO. We are reaffirming our no-moat rating and High Morningstar Uncertainty Rating.

We are reaffirming our $37 fair value estimate for NRG Energy after the company confirmed that activist investor Elliott Management holds a 13% economic interest and is pushing for strategic changes. We are reaffirming our no-moat rating and High Morningstar Uncertainty Rating.

We are reaffirming our fair value estimates for NRG Energy ($37 per share) and Vistra Energy ($24) after the Texas grid operator, ERCOT, released its summer seasonal outlook. We are reaffirming our no-moat and High Uncertainty Ratings for both companies.

We are reaffirming our $37 fair value estimate for NRG Energy after the company announced $646 million of adjusted EBITDA in the first quarter, up from $506 million in the year-ago quarter after adjusting for power plant retirements in 2022. We are reaffirming our no-moat rating, stable moat trend rating, and High Morningstar Uncertainty Rating.

NRG Energy is no longer the business it used to be just a few years ago. Following its $5.2 billion Vivint Smart Home acquisition in March 2023, NRG is predominantly a nationwide retail energy supplier, a strategic flip from its legacy as a Texas-based power generator. We estimate NRG's legacy power generation business will represent less than 30% of consolidated earnings once it integrates Vivint.

We are reaffirming our $37 fair value estimate for NRG Energy after the company announced $1.75 billion of adjusted EBITDA in 2022, down from $2.4 billion in 2021. We had anticipated lower earnings in 2022 due to operational challenges during the summer. Results were consistent with management's earlier guidance toward the lower end of its initial $1.95 billion-$2.25 billion EBITDA target range. We are reaffirming our no-moat rating, High Uncertainty Rating, and stable moat trend.

We are reaffirming our fair value estimates for NRG Energy ($37 per share) and Vistra Energy ($23) after the Texas Public Utilities Commission sent the state legislature a plan to revamp the state's electricity markets. We are reaffirming our no-moat and High Uncertainty ratings. Both stocks trade below our fair value estimates as of Jan. 23.