This module uses fundamental data of NRG Energy to approximate the value of its Beneish M Score. NRG Energy M Score tells investors if the company management is likely to be manipulating earnings. The score is calculated using eight financial indicators that are adjusted by a specific multiplier. Please note, the M Score is a probabilistic model and cannot detect companies that manipulate their earnings with 100% accuracy. Check out NRG Energy Piotroski F Score and NRG Energy Altman Z Score analysis.
At this time, NRG Energy's Short and Long Term Debt is most likely to decrease significantly in the upcoming years. The NRG Energy's current Net Debt To EBITDA is estimated to increase to 6.10, while Net Debt is projected to decrease to roughly 8.9 B. At this time, NRG Energy's Days Sales Outstanding is most likely to decrease significantly in the upcoming years. The NRG Energy's current Book Value Per Share is estimated to increase to 12.83, while Free Cash Flow Yield is forecasted to increase to (0.07).
At this time, it appears that NRG Energy is an unlikely manipulator. The earnings manipulation may begin if NRG Energy's top management creates an artificial sense of financial success, forcing the stock price to be traded at a high price-earnings multiple than it should be. In general, excessive earnings management by NRG Energy executives may lead to removing some of the operating profits from subsequent periods to inflate earnings in the following periods. This way, the manipulation of NRG Energy's earnings can lead to misrepresentations of actual financial condition, taking the otherwise loyal stakeholders on to the path of questionable ethical practices and plain fraud.
The cure to earnings manipulation is the transparency of financial reporting. It will typically remove the temptation of the top executives to inflate earnings (i.e., to promote the idea of 'winning at any cost'). Because a healthy internal audit department can enhance transparency, the board should promote the auditors' access to all the record-keeping systems across the enterprise. For example, if NRG Energy's auditors report directly to the board (not management), the managers will be reluctant to manipulate simply due to the fear of punishment. On the other hand, the auditors will be free to investigate the ledgers properly because they know that the board has their back.
One of the toughest challenges investors face today is learning how to quickly synthesize historical financial statements and information provided by the company, SEC reporting, and various external parties in order to detect the potential manipulation of earnings. Understanding the correlation between NRG Energy's different financial indicators related to revenue, expenses, operating profit, and net earnings helps investors identify and prioritize their investing strategies towards NRG Energy in a much-optimized way. Analyzing correlations between earnings drivers directly associated with dollar figures is the most effective way to find NRG Energy's degree of accounting gimmicks and manipulations.
M-Score is one of many grading techniques for value stocks. It was developed by Professor M. Daniel Beneish of the Kelley School of Business at Indiana University and published in 1999 under the paper titled The Detection of Earnings Manipulation. The Beneish score is a multi-factor model that utilizes financial identifiers to compile eight variables used to classify whether a company has manipulated its reported earnings. The variables are built from the officially filed financial statements to create a final score call 'M Score.' The score helps to identify companies that are likely to manipulate their profits if they show deteriorating gross margins, operating expenses, and leverage against growing revenue.
Other Operating Expenses
29.86 Billion
At this time, NRG Energy's Other Operating Expenses is most likely to increase significantly in the upcoming years.
NRG Energy Earnings Manipulation Drivers
Although earnings manipulation is typically not the result of intentional misconduct by the c-level executives, it is still a widespread practice by the senior management of public companies such as NRG Energy. It is usually done by a series of misrepresentations of various accounting rules and operating activities across multiple financial cycles. The best way to spot the manipulation is to examine the historical financial statement to find inconsistencies in earning reports to find trends in assets or liabilities that are not sustainable in the future.
Some studies have found that companies with high sustainability scores are getting higher valuations than competitors with lower social-engagement activities. While most ESG disclosures are voluntary and do not directly affect the long term financial condition, NRG Energy's sustainability indicators can be used to identify proper investment strategies using environmental, social, and governance scores that are crucial to NRG Energy's managers, analysts, and investors.
Environmental
Governance
Social
About NRG Energy Fundamental Analysis
The Macroaxis Fundamental Analysis modules help investors analyze NRG Energy's financials across various querterly and yearly statements, indicators and fundamental ratios. We help investors to determine the real value of NRG Energy using virtually all public information available. We use both quantitative as well as qualitative analysis to arrive at the intrinsic value of NRG Energy based on its fundamental data. In general, a quantitative approach, as applied to this company, focuses on analyzing financial statements comparatively, whereas a qaualitative method uses data that is important to a company's growth but cannot be measured and presented in a numerical way.
When determining whether NRG Energy is a strong investment it is important to analyze NRG Energy's competitive position within its industry, examining market share, product or service uniqueness, and competitive advantages. Beyond financials and market position, potential investors should also consider broader economic conditions, industry trends, and any regulatory or geopolitical factors that may impact NRG Energy's future performance. For an informed investment choice regarding NRG Stock, refer to the following important reports:
For more detail on how to invest in NRG Stock please use our How to Invest in NRG Energy guide.You can also try the Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Is Independent Power and Renewable Electricity Producers space expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of NRG Energy. If investors know NRG will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about NRG Energy listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth
1.696
Dividend Share
1.63
Earnings Share
4.04
Revenue Per Share
133.419
Quarterly Revenue Growth
(0.09)
The market value of NRG Energy is measured differently than its book value, which is the value of NRG that is recorded on the company's balance sheet. Investors also form their own opinion of NRG Energy's value that differs from its market value or its book value, called intrinsic value, which is NRG Energy's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because NRG Energy's market value can be influenced by many factors that don't directly affect NRG Energy's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between NRG Energy's value and its price as these two are different measures arrived at by different means. Investors typically determine if NRG Energy is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, NRG Energy's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.