It's been a pretty great week for NRG Energy, Inc. (NYSE:NRG) shareholders, with its shares surging 15% to US$80.29 in the week since its latest second-quarter results. Revenues missed the mark, coming in 20% below forecasts, at US$6.7b. Statutory profits were a real bright spot in contrast, with per-share profits of US$3.37 being a notable 118% above what the analysts were modelling. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Following the latest results, NRG Energy's six analysts are now forecasting revenues of US$30.2b in 2024. This would be a reasonable 4.5% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to nosedive 43% to US$5.50 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$29.8b and earnings per share (EPS) of US$5.69 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$83.64, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values NRG Energy at US$110 per share, while the most bearish prices it at US$41.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that NRG Energy's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 9.3% growth on an annualised basis. This is compared to a historical growth rate of 26% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.7% annually. Even after the forecast slowdown in growth, it seems obvious that NRG Energy is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on NRG Energy. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for NRG Energy going out to 2026, and you can see them free on our platform here..

Even so, be aware that NRG Energy is showing 3 warning signs in our investment analysis , and 2 of those shouldn't be ignored...

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.