NRG Energy provides electricity, system power, distributed generation, solar and wind products, backup generation, storage and distributed solar, demand response, energy efficiency, and on-site energy solutions,carbon management and specialty services, and various energy services, such as operations, maintenance, technical, development and asset management services. The company was founded in 1989 and is based in Princeton, New Jersey.
NRG Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for Nrg Energy Inc with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Nrg Energy Inc ranked in the 73th percentile in terms of potential gain offered. More precisely, our analysis suggests the stock is undervalued by approximately 375.33% on a DCF basis. The most interesting components of our discounted cash flow analysis for Nrg Energy Inc ended up being:
Nrg Energy Inc's weighted average cost of capital (WACC) is 6%; for context, that number is higher than just 6.67% of tickers in our DCF set.
Nrg Energy Inc's effective tax rate, as measured by taxes paid relative to net income, is at 183 -- greater than 98.58% of US stocks with positive free cash flow.
The company's cost of debt, derived from its interest coverage, tax rate, and market capitalization, is greater than only 16.74% of stocks in its sector (Utilities).
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
CIG, AT, BIP, NEP, and SPH can be thought of as valuation peers to NRG, in the sense that they are in the Utilities sector and have a similar price forecast based on DCF valuation.