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NRG Energy Stock Offers Solid Upside Potential

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Jun. 18 2019, Updated 10:16 a.m. ET

Analysts’ target prices

Analysts seem to be positive on NRG Energy (NRG) stock. The stock offers a handsome upside potential of more than 37% for the next 12 months. Based on analysts’ consensus estimate, NRG Energy has a target price of $47.4 compared to its current price of $34.4. Morgan Stanley increased NRG Energy’s target price from $46.0 to $47.0 last week.

Among the 11 analysts tracking NRG Energy stock, three recommended a “hold,” four recommended a “buy,” and four recommended a “strong buy.” None of the analysts recommended a “sell” as of June 18.

Analysts’ target price of $18.3 for AES (AES) indicates a potential upside of 8.3% compared to its current market price of $16.8 over the next 12 months. Among the ten analysts tracking AES, four recommended a “buy,” four recommended a “hold,” and one recommended a “sell” as of June 18.

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Valuation

NRG Energy stock looks attractive based on its current valuation. The stock is trading at nine times its forward earnings—lower than utilities’ (XLU) average valuation multiple of 18x–19x. AES is trading at 12x its forward earnings.

Investors generally take shelter under top-yielding stocks amid market uncertainties. Recently, top utilities like Southern Company (SO) witnessed a solid increase. In contrast, NRG Energy pays trivial dividends.

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