NRG Energy Earnings: Narrowing Loss Didn’t Help Meet Expectations

S&P 500 (NYSE:SPY) component NRG Energy Inc.’s (NYSE:NRG) third quarter loss narrowed due mainly to shrinking costs. NRG Energy owns and operates power generation facilities and is involved in the transacting of fuel and transportation services and related products.

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NRG Energy Inc. Earnings Cheat Sheet

Results: Loss narrowed to $1 million (loss of one cent per diluted share) from $55 million (loss of 24 cents per share) in the same quarter a year earlier.

Revenue: Fell 12.8% to $2.33 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: NRG Energy Inc. fell short of the mean analyst estimate of 53 cents per share. It beat the average revenue estimate of $2.2 billion.

Quoting Management: “The twin focus of NRG management this quarter has been on achieving in a timely manner all of the milestones, including integration planning, towards closing the GenOn transaction and on delivering a solid third quarter 2012 financial performance. I am pleased to say that we have achieved both,” commented David Crane, NRG’s President and Chief Executive Officer. “As we move to realize the substantial EBITDA and cash flow synergies directly created by this powerful merger, we are also preparing to capture the ‘knock on’ benefits of the combination in terms of operational cost synergies, retail expansion and the like.”

Key Stats:

Revenue has dropped for three consecutive quarters. In the second quarter, revenue declined 4.9% to $2.17 billion while the figure fell 6.7% in the first quarter from the year earlier.

The company fell short of estimates last quarter after beating the mark the quarter before with net income of $1.08 versus a mean estimate of net income of 16 cents per share.

The company reported a net loss last quarter after booking a profit the quarter before that. The company booked a profit of $207 million, or 92 cents per share, in the first quarter.

The company’s cost of sales slipped to $1.73 billion, a dip of 76.8% from a year ago. Last quarter, cost of sales was 74% of revenue versus 76.8% a year earlier.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the fourth quarter has moved down from 25 cents a share to 5 cents over the last sixty days. For the fiscal year, the average estimate has moved up from 94 cents a share to $1 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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