Key Takeaways
- NRG Energy jumped 10% after agreeing to sell six gas plants to LS Power for $4 billion and raising its 2026-27 buyback plan to $3 billion.
- Buying back a stock this cheap is a smart use of the cash, though half goes to debt.
- NRG’s 2027 adjusted EPS guidance midpoint of $9.05 sits below the $10.51 analysts expected.
- NRG’s deal matters to Vistra, which just bought gas plants, and Talen Energy, which sold future cash flows for buybacks.
NRG Energy (NRG) is up 10% today after agreeing to sell six natural gas plants to LS Power for $4 billion in cash.
Vistra (VST), up 7%, just bought gas plants of its own, and Talen Energy (TLN), up 7%, sold future cash flows to fund a buyback.
Back to LS Power
“We are unlocking substantial value from a select group of assets,” CEO Robert Gaudette said. LS Power is paying 8x the adjusted EBITDA NRG expects the 4.9 GW of plants in New York, New England and Texas to earn in 2027. NRG keeps its PJM plants, leaving it 20 GW split evenly between ERCOT and PJM.
Of the $4 billion, $1 billion funds extra buybacks, $2 billion pays down debt, and $1 billion goes to growth projects or more debt reduction.
Why Vistra and Talen care
Vistra went the other way, closing its purchase of Cogentrix’s roughly 5,500 MW of gas plants in October. NRG’s 8x cash price for Texas and Northeast plants is a handy mark for that fleet. It’s buying back stock too, with about $2.5 billion authorized through 2028.
Talen sold about $1.5 billion of future PJM capacity payments and put the $1.3 billion of net proceeds into a $1.5 billion accelerated buyback. Its 2027 guidance calls for about 26% adjusted EBITDA growth at the midpoint, partly on strong PJM fundamentals, management says. NRG keeping every PJM plant looks like a bet on the same thing.
TIKR tracks 18 analysts on NRG Energy. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on NRG Energy, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See NRG Energy’s Analyst Ratings
Buying back a cheap stock
NRG’s 2027 outlook came in below the estimates analysts had going in:
The $9.05 midpoint, which leaves out the sale, sits well under that $10.51, so I’d expect 2027 estimates to come down. But NRG is buying back stock cheap by its own standards:
The stock traded at 8.9x forward earnings at Friday’s close, under its 11.7x five-year average, and sits around 10x after today’s jump.
Here’s where I land: turning plants into buybacks at this price is a smart deal for shareholders, even if 2027 estimates slip. The sale still needs FERC and New York regulators before its targeted second-quarter 2027 close.
So what is NRG stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
