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Analyzing NRG Energy’s Current Valuation

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Valuation

NRG Energy (NRG), valued at a market cap of $8.5 billion, rose the most among its peers in the past year. Currently, NRG Energy is trading at an EV-to-EBITDA valuation of 13x—compared to its five-year historical valuation of ~11x. Utilities at large are trading at an EV-to-EBITDA valuation of ~10.5x. NRG Energy stock appears to be trading at a large premium compared to its peers and its historical average.

NRG stk

In comparison, NextEra Energy (NEE) stock, the largest among the S&P 500 Utilities (XLU), is trading at a valuation multiple of 13x, while Duke Energy (DUK) is trading close to 11x.

The above chart shows that NRG Energy stock significantly outperformed its peers and the broader markets since it introduced a transformation plan in July 2017.

To learn about utilities’ latest performance and how they’re placed in the future, read Why Utilities’ Recent Recovery Might Be Short-Lived.

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