NRG 4Q2016 Earnings Quick Note

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Market Price (11/4/2016): $11.03/share; ST-Target: $17/share; NIV: $52/share

Management appears to be setting the agenda for strategic review

Note: Please note that due to five companies (NRG, CNP, PNM, LNG, SRE) reporting on one day, we will be writing a Quick Note for all of the companies reporting today followed by a full note later in the week

It would seem to us that management is attempting to set the agenda for the strategic review

It would seem that the agenda for the strategic review would be based on objectives laid-out by management for 2016 and 2017. From our perspective, we feel that the strategy preferred by management is the following:

  • Continue to keep all businesses including all of its renewable portfolio
  • Continue to utilize NYLD as a ready source of capital and maintain a large ownership stake
  • Aggressively reduce corporate debt
  • Continue to streamline the cost structure
  • Keep generation portfolio largely as is, watching to see which of the competitors do what before committing to any sort of strategic initiative, particularly in Texas
  • Keep expanding on the Retail business
  • Look for acquisition opportunities
  • Keep the dividend

However, we feel that there may be an alternative agenda that could prove to be effective for increasing shareholder value:

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