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NRG Energy Piotroski F-Score

: 6 (As of Today)
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The zones of discrimination were as such:

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

NRG Energy has an F-score of 6 indicating the company's financial situation is typical for a stable company.

NYSE:NRG' s Piotroski F-Score Range Over the Past 10 Years
Min: 3   Max: 9
Current: 6

3
9

During the past 13 years, the highest Piotroski F-Score of NRG Energy was 9. The lowest was 3. And the median was 6.


NRG Energy Piotroski F-Score Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

NRG Energy Annual Data
Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18
Piotroski F-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 5.00 5.00 3.00 6.00 7.00

NRG Energy Quarterly Data
Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17 Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19
Piotroski F-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 8.00 7.00 8.00 8.00 6.00

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.


NRG Energy Piotroski F-Score Distribution

* The bar in red indicates where NRG Energy's Piotroski F-Score falls into.


How is the Piotroski F-Score calculated?

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep19) TTM:Last Year (Sep18) TTM:
Net Income was -12 + 482 + 201 + 372 = USD 1,043 Mil.
Cash Flow from Operations was 310 + -127 + 516 + 472 = USD 1,171 Mil.
Revenue was 1992 + 2165 + 2465 + 2996 = USD 9,618 Mil.
Gross Profit was 396 + 514 + 620 + 843 = USD 2,373 Mil.
Average Total Assets from the begining of this year (Sep18)
to the end of this year (Sep19) was
(11450 + 10628 + 9530 + 9171 + 9527) / 5 = USD 10061.2 Mil.
Total Assets at the begining of this year (Sep18) was USD 11,450 Mil.
Long-Term Debt & Capital Lease Obligation was USD 6,298 Mil.
Total Current Assets was USD 3,187 Mil.
Total Current Liabilities was USD 2,564 Mil.
Net Income was -1534 + 279 + 72 + -72 = USD -1,255 Mil.

Revenue was 1828 + 2065 + 2461 + 2960 = USD 9,314 Mil.
Gross Profit was 531 + 680 + 572 + 722 = USD 2,505 Mil.
Average Net Income from the begining of last year (Sep17)
to the end of last year (Sep18) was
(25470 + 23355 + 23752 + 22947 + 11450) / 5 = USD 21394.8 Mil.
Total Assets at the begining of last year (Sep17) was USD 25,470 Mil.
Long-Term Debt & Capital Lease Obligation was USD 6,658 Mil.
Total Current Assets was USD 4,295 Mil.
Total Current Liabilities was USD 2,723 Mil.

Profitability

Question 1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by Total Assets at the beginning of the year.

Score 1 if positive, 0 if negative.

NRG Energy's current Net Income (TTM) was 1,043. ==> Positive ==> Score 1.

Question 2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by Total Assets at the beginning of the year.

Score 1 if positive, 0 if negative.

NRG Energy's current Cash Flow from Operations (TTM) was 1,171. ==> Positive ==> Score 1.

Question 3. Change in Return on Assets

Compare this year's return on assets (1) to last year's return on assets.

Score 1 if it's higher, 0 if it's lower.

ROA (This Year)=Net Income/Total Assets(Sep18)
=1043/11450
=0.0910917

ROA (Last Year)=Net Income/Total Assets(Sep17)
=-1255/25470
=-0.04927366

NRG Energy's return on assets of this year was 0.0910917. NRG Energy's return on assets of last year was -0.04927366. ==> This year is higher. ==> Score 1.

Question 4. Quality of Earnings (Accrual)

Compare Cash flow return on assets (2) to return on assets (1)

Score 1 if CFROA > ROA, 0 if CFROA <= ROA.

NRG Energy's current Net Income (TTM) was 1,043. NRG Energy's current Cash Flow from Operations (TTM) was 1,171. ==> 1,171 > 1,043 ==> CFROA > ROA ==> Score 1.

Funding

Question 5. Change in Gearing or Leverage

Compare this year's gearing (long-term debt divided by average total assets) to last year's gearing.

Score 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Sep19)=Long-Term Debt & Capital Lease Obligation/Total Assetsfrom Sep18 to Sep19
=6298/10061.2
=0.62596907

Gearing (Last Year: Sep18)=Long-Term Debt & Capital Lease Obligation/Total Assetsfrom Sep17 to Sep18
=6658/21394.8
=0.31119711

NRG Energy's gearing of this year was 0.62596907. NRG Energy's gearing of last year was 0.31119711. ==> Last year is lower than this year ==> Score 0.

Question 6. Change in Working Capital (Liquidity)

Compare this year's current ratio (current assets divided by current liabilities) to last year's current ratio.

Score 1 if this year's current ratio is higher, 0 if it's lower

Current Ratio (This Year: Sep19)=Total Current Assets/Total Current Liabilities
=3187/2564
=1.24297972

Current Ratio (Last Year: Sep18)=Total Current Assets/Total Current Liabilities
=4295/2723
=1.57730444

NRG Energy's current ratio of this year was 1.24297972. NRG Energy's current ratio of last year was 1.57730444. ==> Last year's current ratio is higher ==> Score 0.

Question 7. Change in Shares in Issue

Compare the number of shares in issue this year, to the number in issue last year.

Score 0 if there is larger number of shares in issue this year, 1 otherwise.

NRG Energy's number of shares in issue this year was 256. NRG Energy's number of shares in issue last year was 299. ==> There is smaller number of shares in issue this year, or the same. ==> Score 1.

Efficiency

Question 8. Change in Gross Margin

Compare this year's gross margin (Gross Profit divided by sales) to last year's.

Score 1 if this year's gross margin is higher, 0 if it's lower.

Gross Margin (This Year: TTM)=Gross Profit/Revenue
=2373/9618
=0.24672489

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=2505/9314
=0.26894997

NRG Energy's gross margin of this year was 0.24672489. NRG Energy's gross margin of last year was 0.26894997. ==> Last year's gross margin is higher ==> Score 0.

Question 9. Change in asset turnover

Compare this year's asset turnover (total sales for the year divided by total assets at the beginning of the year) to last year's asset turnover ratio.

Score 1 if this year's asset turnover ratio is higher, 0 if it's lower

Asset Turnover (This Year)=Revenue/Total Assets at the Beginning of This Year (Sep18)
=9618/11450
=0.84

Asset Turnover (Last Year)=Revenue/Total Assets at the Beginning of Last Year (Sep17)
=9314/25470
=0.36568512

NRG Energy's asset turnover of this year was 0.84. NRG Energy's asset turnover of last year was 0.36568512. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=1+1+1+1+0+0+1+0+1
=6

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

NRG Energy has an F-score of 6 indicating the company's financial situation is typical for a stable company.

NRG Energy  (NYSE:NRG) Piotroski F-Score Explanation

The developer of the system is Joseph D. Piotroski is relatively unknown accounting professor who shuns publicity and rarely gives interviews.

He graduated from the University of Illinois with a B.S. in accounting in 1989, received an M.B.A. from Indiana University in 1994. Five years later, in 1999, after earning a Ph.D. in accounting from the University of Michigan, he became an associate professor of accounting at the University of Chicago.

In 2000, he wrote a research paper called "Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers" (pdf).

He wanted to see if he can develop a system (using a simple nine-point scoring system) that can increase the returns of a strategy of investing in low price to book (referred to in the paper as high book to market) value companies.

What he found was something that exceeded his most optimistic expectations.

Buying only those companies that scored highest (8 or 9) on his nine-point scale, or F-Score as he called it, over the 20 year period from 1976 to 1996 led to an average out-performance over the market of 13.4%.

Even more impressive were the results of a strategy of investing in the highest F-Score companies (8 or 9) and shorting companies with the lowest F-Score (0 or 1).

Over the same period from 1976 to 1996 (20 years) this strategy led to an average yearly return of 23%, substantially outperforming the average S&P 500 index return of 15.83% over the same period.


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