Perilous Reversal Stock: NRG Yield (NYLD)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified NRG Yield ( NYLD) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified NRG Yield as such a stock due to the following factors:

  • NYLD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $23.4 million.
  • NYLD has traded 625,444 shares today.
  • NYLD is down 3.2% today.
  • NYLD was up 5.7% yesterday.

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More details on NYLD:

NRG Yield, Inc., through its subsidiaries, acquires, owns, and operates contracted renewable and conventional generation, and thermal infrastructure assets in the United States. The stock currently has a dividend yield of 3.2%. NYLD has a PE ratio of 83.4. Currently there are 4 analysts that rate NRG Yield a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for NRG Yield has been 341,900 shares per day over the past 30 days. NRG Yield has a market cap of $1.7 billion and is part of the utilities sector and utilities industry. Shares are up 4.4% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates NRG Yield as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and weak operating cash flow.

Highlights from the ratings report include:
  • The debt-to-equity ratio is very high at 3.28 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Regardless of the company's weak debt-to-equity ratio, NYLD has managed to keep a strong quick ratio of 1.64, which demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has decreased to $29.00 million or 23.68% when compared to the same quarter last year. Despite a decrease in cash flow of 23.68%, NRG YIELD INC is in line with the industry average cash flow growth rate of -32.17%.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Independent Power Producers & Energy Traders industry average, but is greater than that of the S&P 500. The net income increased by 100.0% when compared to the same quarter one year prior, rising from -$50.00 million to $0.00 million.
  • The gross profit margin for NRG YIELD INC is rather high; currently it is at 60.81%. Regardless of NYLD's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 0.00% trails the industry average.
  • Compared to other companies in the Independent Power Producers & Energy Traders industry and the overall market on the basis of return on equity, NRG YIELD INC underperformed against that of the industry average and is significantly less than that of the S&P 500.

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