NRG ENERGY, INC. (NRG) Stock Analysis
NRG ENERGY, INC. (NRG) Stock Analysis
Analysis from 10-Q filed 2025-11-06. Data as of Q4 2025.
Overall Grade: F (Concerning)
NRG ENERGY, INC. faces challenges in financial performance that warrant careful analysis.
| Metric | Value | Context |
|---|---|---|
| ROIC | 11.9% | Near cost of capital |
| FCF Margin | 2.5% | Cash flow pressure |
Investment Thesis: Financial metrics indicate concerning business quality with areas requiring attention.
Explore NRG ENERGY, INC.: Earnings History | Filing Intelligence | ROIC Analysis
Profitability: NRG ENERGY, INC. earns 11.9% ROIC, Top 25% in Utilities
NRG ENERGY, INC.'s trailing-twelve-month ROIC of 11.9% ranks Top 25% in Utilities companies (sector median: 5.8%), driven by NOPAT margin of 4.6% combined with asset turnover of 1.2x. Source: 10-Q filed 2025-11-06. Gross margin of 19.4% with operating margin at 6.0% reflects a competitive pricing environment.
| Metric | NRG | Rating | Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 11.9% | Adequate | Above sector median of 5.8% |
| Gross Margin | 19.4% | Warning | Competitive pricing environment |
| Operating Margin | 6.0% | Adequate | Moderate operational efficiency |
Cash Flow: NRG ENERGY, INC. generates $766.0M FCF at 2.5% margin, positive NaN/8 quarters
NRG ENERGY, INC. generated $766.0M in free cash flow (TTM), a 2.5% FCF margin, a margin that ranks Top 50% in Utilities. Operating cash flow exceeds net income by 2.4x, indicating high earnings quality. FCF was positive in N/A of the last 8 quarters. Source: 10-Q filed 2025-11-06.
| Metric | NRG | Rating | Context |
|---|---|---|---|
| Free Cash Flow Margin | 2.5% | Warning | Thin cash margins |
| Free Cash Flow (TTM) | $766.0M | Good | Positive cash generation |
| OCF/Net Income | 2.4x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
Balance Sheet Analysis for NRG ENERGY, INC.
Total debt of $16.4B offset by $4.7B in cash. Source: 10-Q filed 2025-11-06.
| Metric | NRG | Rating | Context |
|---|---|---|---|
| Net Cash Position | $-11.7B | Warning | Net debt position |
Valuation: NRG ENERGY, INC. trades at 39.2x earnings
NRG ENERGY, INC. trades at a P/E of 39.2x. Free cash flow yield of 2.5% reflects market expectations for growth.
| Metric | NRG | Rating | Context |
|---|---|---|---|
| P/E Ratio | 39.2x | Adequate | Premium valuation |
| EV/Sales | 1.4x | Excellent | Attractive revenue multiple |
| FCF Yield | 2.5% | Adequate | Lower cash yield |
Capital Allocation: NRG ENERGY, INC. returns 4.2% shareholder yield
NRG ENERGY, INC.'s total shareholder yield is 4.2% (dividends + buybacks 4.2%). Source: 10-Q filed 2025-11-06.
| Metric | NRG | Rating | Context |
|---|---|---|---|
| Total Shareholder Yield | 4.2% | Good | Dividend + buyback yield combined |
| Buyback Yield | 4.2% | Good | Active share repurchases |
| Total Capital Returned (TTM) | $1.3B | Good | Dividends + buybacks returned to shareholders |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 11.9% | Top 25% | 2.1x above |
| Free Cash Flow Margin | 2.5% | Top 50% | - |
| Gross Margin | 19.4% | Bottom 25% | 0.3x below |
| Operating Margin | 6.0% | Bottom 25% | 0.3x below |
| P/E Ratio | 39.2x | N/A | - |
Financial Scorecard
| Metric | NRG | Rating | Sector Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 11.9% | Adequate | Top 25% of sector (median: 5.8%) |
| Free Cash Flow Margin | 2.5% | Warning | Top 50% of sector (median: 0.0%) |
| Gross Margin | 19.4% | Warning | Bottom 25% of sector (median: 63.8%) |
| P/E Ratio (Price-to-Earnings) | 39.2x | Adequate | High expectations priced in |
| Free Cash Flow Yield | 2.5% | Warning | Growth-focused valuation |
Frequently Asked Questions
Q: What is NRG ENERGY, INC.'s Return on Invested Capital (ROIC)?
NRG ENERGY, INC. (NRG) has a trailing twelve-month Return on Invested Capital (ROIC) of 11.9%. This compares above the sector median of 5.8%. An ROIC near 8-12% is approximately the cost of capital for most companies.
Q: What is NRG ENERGY, INC.'s Free Cash Flow Margin?
NRG ENERGY, INC. (NRG) has a free cash flow margin of 2.5%, generating $766.0 million in free cash flow over the trailing twelve months. A thin FCF margin may indicate heavy reinvestment or operational challenges.
Q: Is NRG ENERGY, INC. stock overvalued or undervalued?
NRG ENERGY, INC. (NRG) trades at a P/E ratio of 39.2x, which is above the sector median of N/A. The EV/Sales multiple is 1.4x. Free cash flow yield is 2.5%, reflecting growth expectations priced into the stock.
Q: What is NRG ENERGY, INC.'s revenue and earnings growth?
NRG ENERGY, INC. (NRG) grew revenue by 9.2% year-over-year. Earnings per share decreased by 18.3% compared to the prior year. Modest growth indicates a mature business with stable demand.
Q: Is NRG ENERGY, INC. buying back stock?
NRG ENERGY, INC. (NRG) repurchased $1.3 billion of stock over the trailing twelve months. This represents a buyback yield of 4.2%.
Q: How does NRG ENERGY, INC. compare to competitors in Utilities?
Compared to other companies in Utilities, NRG ENERGY, INC. (NRG) shows: ROIC of 11.9% is above the sector median of 5.8% (Top 14%). FCF margin of 2.5% exceeds the sector median of 0.0% (Top 45% of sector). Gross margin at 19.4% is 44.4 percentage points lower than sector peers. These rankings are based on MetricDuck's analysis of all Utilities companies with available SEC filings.
Q: What warning signs should I watch for with NRG ENERGY, INC.?
Investors in NRG ENERGY, INC. (NRG) should monitor these potential warning signs: 1) FCF margin is thin at 2.5%, leaving limited buffer for economic downturns. 2) ROIC has been declining, potentially signaling deteriorating competitive position. Regular monitoring of SEC filings and quarterly trends is recommended.
Data Source: Data sourced from 10-Q filed 2025-11-06. TTM metrics as of Q4 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
Scope: This analysis covers SEC filing fundamentals — profitability, cash flow, balance sheet, and valuation metrics. For analyst estimates and price targets, consult sell-side research.
This analysis is for informational purposes only and does not constitute investment advice.