NRG Energy bolsters Texas power capacity with $560M acquisition

HOUSTON - NRG Energy Inc. (NYSE:NRG), currently trading at $92.47 and identified as undervalued according to InvestingPro Fair Value metrics, has announced the acquisition of six power generation facilities from Rockland Capital, LLC, for $560 million, a move to expand its presence in the Texas energy market. The company, with a market capitalization of $18.35 billion, has demonstrated strong momentum with a 51.39% return over the past year. The purchase, which includes one combined-cycle unit and five peaker units, will add 738 Megawatts (MW) of natural gas-fired capacity to NRG’s portfolio, enhancing its ability to meet the state’s increasing electricity demand.

The acquired assets, which are approximately 50% hedged through 2028, are expected to contribute an annual adjusted EBITDA of approximately $50-60 million for the hedged portion and about $70-80 million for the unhedged portion. This addition complements NRG’s existing operations, which generated $3.49 billion in EBITDA over the last twelve months, with an attractive EV/EBITDA ratio of 8.3x. The transaction, which is subject to Hart-Scott-Rodino regulatory approval, is anticipated to close in the second quarter of 2025.

Robert J. Gaudette, Executive Vice President and President of NRG Business and Wholesale Operations, emphasized the strategic importance of the acquisition, stating that it strengthens NRG’s position as a leading generator in Texas. He cited the state’s record electricity growth, driven by factors such as electrification, onshoring, population growth, and the proliferation of data centers, as key drivers for this expansion.

The acquisition is considered earnings-accretive and will be primarily financed through corporate debt. NRG has indicated that it will not affect the company’s stated capital allocation plan. With the cost of the acquisition significantly below that of new construction, at $760 per kW, NRG is positioning itself to capitalize on the market’s growth while delivering long-term value to shareholders.

NRG Energy Inc. is a Fortune 500 company that operates in the United States and Canada, delivering energy and home services solutions. The company advocates for competitive energy markets and customer choice, aiming to contribute to a smarter, cleaner, and more connected future. InvestingPro analysis reveals several positive indicators, including aggressive share buybacks and consistent dividend growth for 5 consecutive years. For detailed insights and access to the comprehensive Pro Research Report covering NRG’s financial health, growth prospects, and valuation metrics, visit InvestingPro.

This news is based on a press release statement and, as with all forward-looking statements, actual results may differ materially from those projected due to various risks and uncertainties. NRG has not updated or revised any forward-looking statements as a result of new information or future events, except as required by law.

In other recent news, NRG Energy has reported its fourth-quarter 2024 earnings, highlighting a significant earnings per share (EPS) of $1.56, which surpassed the expected $1.08. Despite missing revenue projections with reported revenue of $6.86 billion against a forecast of $7.36 billion, the company’s robust profitability has been noted. Additionally, BMO Capital Markets raised its price target for NRG Energy to $115 from $100, maintaining a Market Perform rating, reflecting confidence in the company’s financial trajectory. Guggenheim Securities also increased its price target to $145, maintaining a Buy rating, citing NRG’s growth strategy and long-term contracts as positive indicators.

NRG Energy has made a strategic investment of $2.5 million in Equilibrium Energy, focusing on AI technology for energy optimization, which aligns with its broader strategy to enhance grid stability. This investment is part of a $50 million corporate venture capital fund aimed at fostering innovation in the energy sector. The company has achieved a 45% year-over-year increase in adjusted EPS, attributed to strong demand and favorable market conditions. Looking forward, NRG Energy reaffirmed its 2025 financial guidance, targeting a greater than 10% compound annual growth rate in EPS through 2029. These developments position NRG Energy as a key player in navigating the evolving energy market landscape.

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