NRG Surges 15% In A Single Month, Time To Buy The Stock?

We believe there are several things to fear in NRG stock given its overall Weak operating performance and financial condition. Hence, together with its High valuation, this makes the stock look Risky. Here is our multi-factor assessment.

But no matter how attractive, investing in a single stock carries high risk. Trefis High Quality Portfolio and is designed to reduce stock-specific risk while giving upside exposure

Let’s get into details of each of the assessed factors but before that, for quick background: With $33 Bil in market cap, NRG Energy provides integrated power generation in the U.S. with 18,000 megawatts capacity across 25 plants using natural gas, coal, oil, solar, nuclear, and battery storage technologies.

[1] Valuation Looks High

This table highlights how NRG is valued vs broader market. For more details see: NRG Valuation Ratios

[2] Growth Is Weak

• NRG Energy has seen its top line grow at an average rate of 0.7% over the last 3 years
• Its revenues have grown 1.8% from $29 Bil to $29 Bil in the last 12 months
• Also, its quarterly revenues grew 1.2% to $6.7 Bil in the most recent quarter from $6.7 Bil a year ago.

This table highlights how NRG is growing vs broader market. For more details see: NRG Revenue Comparison

[3] Profitability Appears Very Weak

• NRG last 12 month operating income was $1.2 Bil representing operating margin of 4.0%
• With cash flow margin of 7.8%, it generated nearly $2.3 Bil in operating cash flow over this period
• For the same period, NRG generated nearly $522 Mil in net income, suggesting net margin of about 1.8%

This table highlights how NRG profitability vs broader market. For more details see: NRG Operating Income Comparison

[4] Financial Stability Looks Weak

• NRG Debt was $11 Bil at the end of the most recent quarter, while its current Market Cap is $33 Bil. This implies Debt-to-Equity Ratio of 33.9%
• NRG Cash (including cash equivalents) makes up $180 Mil of $24 Bil in total Assets. This yields a Cash-to-Assets Ratio of 0.7%

[4] Downturn Resilience Is Weak

NRG has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• NRG stock fell 33.8% from a high of $46.85 on 25 May 2022 to $31.03 on 19 January 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 14 November 2023
• Since then, the stock increased to a high of $173.91 on 4 August 2025 , and currently trades at $167.43

 
2020 Covid Pandemic

• NRG stock fell 45.1% from a high of $40.06 on 14 February 2020 to $21.99 on 18 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 12 January 2021

 
2008 Global Financial Crisis

• NRG stock fell 67.7% from a high of $46.90 on 18 October 2007 to $15.17 on 10 October 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 14 November 2023

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read NRG Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – S&P 500, Russell, and S&P midcap. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.