NRG Energy, Inc. (NRG), headquartered in Houston, Texas, is an energy and home services company that produces, sells, and delivers energy products and services to residential, industrial, and commercial consumers in the U.S. and Canada. Valued at $14.84 billion by market cap, the company serves more than 7.5 million customers by generating electricity and providing energy solutions and natural gas through its portfolio of retail brands.
Shares of this leading energy company have outperformed the broader market considerably over the past year. NRG has gained 89.7% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 17%. In 2024 alone, NRG stock is up 37.7%, surpassing SPX’s 9.9% rise on a YTD basis.
Zooming in further, NRG’s outperformance is even more pronounced compared to the S&P 500 Utilities Sector SPDR (XLU). The exchange-traded fund has gained about 13.9% over the past year. Moreover, NRG’s gains on a YTD basis outshine the ETF’s 15.1% returns over the same time frame.
On Jun. 6, NRG shares closed down more than 4% on speculation that power demand fueled by AI and data centers was over-optimistic.
NRG’s overall performance can be attributed to the expected rise in U.S. energy demand thanks to the growing use of artificial intelligence (AI). Data centers are expected to play a key role in running AI applications, and independent power providers are expected to benefit from this trend as data centers require an uninterrupted power supply.
For the current fiscal year, ending in December, analysts expect NRG’s EPS to grow 3.5% to $4.47 on a diluted basis. The company’s earnings surprise history is impressive. It beat the consensus estimate in three of the last four quarters while missing the forecast on another occasion.
Among the eight analysts covering NRG stock, the consensus rating is a “Moderate Buy.” That’s based on four “Strong Buy” ratings and four “Holds.”
This configuration has been consistent over the past three months.
Recently, Morgan Stanley analyst David Arcaro maintained a “Hold” rating on NRG stock with a price target of $83, implying a potential upside of 16.6% from current levels.
The mean price target of $83.75 represents a 17.6% premium to NRG’s current price levels. The Street-high price target of $110 suggests an upside potential of 54.5%.
On the date of publication, Dipanjan Banchur did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
