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NRG Energy’s Loss Widened in 2017, Stock Soared 4%

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NRG Energy’s loss widened in 2017

NRG Energy (NRG) reported its 4Q17 and fiscal 2017 earnings on March 1, 2018. The company reported adjusted earnings of $0.25 per share for the quarter ending on December 31, 2017—compared to a loss of $0.16 per share in 2017.

For fiscal 2017, NRG Energy reported a loss of $1.55 billion—compared to its loss of $983 million in 2016. The loss in 2017 was driven by a $1.8-billion impairment of fixed assets, goodwill, and investments. Among the impairments, $1.2 billion was related to the South Texas Project nuclear generation facility, mainly due to future commodity prices’ revised outlook.

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Earnings drivers

NRG Energy is the largest merchant power player in the country. The company posted revenues of $2.5 billion in the reported quarter—compared to similar revenues in 4Q16.

NRG Energy reported an adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $497 million in 4Q17—compared to $471 million in 4Q16. NRG Energy’s Generation segment foundered because of the above-mentioned asset impairments. The Retail segment continued to flourish during the reported quarter. The Retail segment’s earnings increased from $317 million in 4Q16 to $506 million in 4Q17.

Sticking to the plan

NRG Energy announced that at the end of 4Q17, it realized $150 million or 231% of its 2017 cost savings target as a part of its transformation plan. To date, NRG Energy has announced or closed ~$3 billion of asset sales, according to its transformation plan target of $3.2 billion. NRG Energy’s ownership sale in NRG Yield and NRG Renewables is underway and will likely be completed by 2H18.

NRG Energy shares closed with a gain of more than 4% on March 1, 2018. NRG Energy stock gained nearly 60% in the last year—compared to peers’ (XLU) (IDU) average fall of ~5%.

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