Why did NRG’s revenues and EPS fall in 9M17?
NRG Energy’s (NRG) operating revenues fell 2.0% in 9M17. Every segment of the company drove this decline. Its operating costs and expenses remained flat. As a result, the company’s operating income fell 18.0%.
NRG’s other expenses decreased 33.0% during the period due to the absence of impairment, an insignificant debt extinguishment charge, and lower interest expenses. These factors translated into negative EPS (earnings per share) after falling 314.0%.
NRG Energy has generated a positive free cash flow balance since 2014. However, it was unable to generate enough free cash flow to pay off its dividends for 2015.
How has NRG’s dividend yield evolved over the years?
NRG Energy’s (NRG) 59.0% cut in its dividend per share in 2016 was followed by a 50.0% cut in 2017. Its stock price rose 127.0% on a year-to-date (or YTD) basis after a 4.0% gain in 2016. This trend explains the company’s downward sloping dividend yield curve.
NRG Energy has a dividend yield of 0.4% and a YTD return of 127.0%, compared to a sector average dividend yield of 3.4% and a PE ratio of 62.6x.
Comparison with broad indexes
The S&P 500 (SPX-INDEX) (SPY) offers a dividend yield of 2.3%, a PE ratio of 22.7x, and a YTD return of 15.5%. The Dow Jones Industrial Average (DJIA-INDEX) (DIA) has a dividend yield of 2.3%, a PE ratio of 21.2x, and a YTD return of 18.7%. The NASDAQ Composite (COMP-INDEX) (ONEQ) has a PE ratio of 25.4x and a YTD return of 25.4%.
The WisdomTree DEFA ETF (DWM) is a dividend ETF with 6.0% exposure to utilities. It has a PE ratio of 17.5x and a dividend yield of 3.1%. The ProShares Russell 2000 Dividend Growers ETF (SMDV) is a dividend ETF with 26.0% exposure to utilities. It has a PE ratio of 23.5x and a dividend yield of 1.6%.