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NEW YORK (TheStreet) -- NRG Energy (NRG - Get Report) has been downgraded by TheStreet Ratings from Buy to Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate NRG ENERGY INC (NRG) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 3.3%. Since the same quarter one year prior, revenues rose by 30.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Independent Power Producers & Energy Traders industry. The net income increased by 41.2% when compared to the same quarter one year prior, rising from $119.00 million to $168.00 million.
- NRG ENERGY INC has improved earnings per share by 33.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, NRG ENERGY INC swung to a loss, reporting -$1.27 versus $2.21 in the prior year. This year, the market expects an improvement in earnings ($1.99 versus -$1.27).
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Independent Power Producers & Energy Traders industry and the overall market on the basis of return on equity, NRG ENERGY INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- The gross profit margin for NRG ENERGY INC is rather low; currently it is at 22.13%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.67% trails that of the industry average.
- You can view the full analysis from the report here: NRG Ratings Report
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