NRG Energy Inc. Earnings Cheat Sheet: Increasing Costs Tighten Margins

On top of dropping to a loss in the third quarter, S&P 500 (NYSE:SPY) component NRG Energy Inc. (NYSE:NRG) also came in short of analyst estimates. NRG Energy owns and operates power generation facilities and is involved in the transacting of fuel and transportation services and related products.

Investing Insights: Here’s Why Chipotle’s Stock Keeps Winning.

NRG Energy Earnings Cheat Sheet for the Third Quarter

Results: Reported a loss of $55 million (24 cents per diluted share) in the quarter. NRG Energy Inc. had a net income of $223 million or 87 cents per share in the year earlier quarter.

Revenue: Fell 0.4% to $2.67 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: NRG fell short of the mean analyst estimate of 35 cents per share, though earnings may have been impacted by a $160 million impairment charge. It fell short of the average revenue estimate of $2.97 billion.

Quoting Management: “Both our wholesale and retail businesses got back on track in September, closing out the quarter with year-to-date results which have us approaching the midpoint of our original 2011 guidance,” commented David Crane, NRG’s President and Chief Executive Officer. “And we continued to experience great success during the quarter, and since the end of the quarter, in deploying the Company’s free cash flow and excess cash both in value-enhancing renewable and repowering investments and in repurchasing common shares far in excess of our initial repurchase plan.”

Key Stats:

Gross margin shrank 8.4 percentage points to 23.2%. The contraction appeared to be driven by increased costs, which rose 11.9% from the year earlier quarter while revenue fell 0.4%.

The company fell short of forecasts after beating estimates in the previous two quarters. In the second quarter, it topped the mark by 8 cents, and in the first quarter, it was ahead by 13 cents.

Revenue fell last quarter after seeing a rise the quarter before. Revenue rose 6.8% to $2.28 billion in the second quarter from the 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 a profit of 27 cents a share to a loss of $1.24 over the last thirty days. For the fiscal year, the average estimate has moved down from 99 cents a share to 77 cents over the last thirty days.

Competitors to Watch: Dynegy Inc. (NYSE:DYN), Constellation Energy Group, Inc. (NYSE:CEG), The AES Corporation (NYSE:AES), Genon Energy Inc (NYSE:GEN), Calpine Corporation (NYSE:CPN), Edison International (NYSE:EIX), NextEra Energy, Inc. (NYSE:NEE), Xcel Energy Inc. (NYSE:XEL), The Southern Company (NYSE:SO), and Exelon Corporation (NYSE:EXC).

Investing Insights: Here’s Why Chipotle’s Stock Keeps Winning.

(Source: Xignite Financials)