NRG Energy, Inc. (NYSE:NRG) & CenterPoint Energy, Inc. (NYSE:CNP)’s Value in Focus as VC2 Gains Momentum

Placing NRG Energy, Inc. (NYSE:NRG) shares under the lens we note that the firm has a current Return on Equity (ROE) of -0.217180.  Simply put, this ratio calculates how well the firm uses investment funds to generate profit.  This ratio is often considered “the mother of all ratios” as it often reveals how well a firm is operating and can act as a solid predictor as well.

Stock volatility is a percentage that indicates whether a stock is a desirable purchase. Investors look at the Volatility 12m to determine if a company has a low volatility percentage or not over the course of a year. The Volatility 12m of NRG Energy, Inc. (NYSE:NRG) is 23.628600. This is calculated by taking weekly log normal returns and standard deviation of the share price over one year annualized. The lower the number, a company is thought to have low volatility. The Volatility 3m is a similar percentage determined by the daily log normal returns and standard deviation of the share price over 3 months. The Volatility 3m of NRG Energy, Inc. (NYSE:NRG) is 27.660400. The Volatility 6m is the same, except measured over the course of six months. The Volatility 6m is 26.665900.

NRG Energy, Inc. (NYSE:NRG) currently has a Montier C-score of 1.00000. This indicator was developed by James Montier in an attempt to identify firms that were cooking the books in order to appear better on paper. The score ranges from zero to six where a 0 would indicate no evidence of book cooking, and a 6 would indicate a high likelihood. A C-score of -1 would indicate that there is not enough information available to calculate the score. Montier used six inputs in the calculation. These inputs included a growing difference between net income and cash flow from operations, increasing receivable days, growing day’s sales of inventory, increasing other current assets, decrease in depreciation relative to gross property plant and equipment, and high total asset growth.

In terms of EBITDA Yield, NRG Energy, Inc. (NYSE:NRG) currently has a value of 0.092821. This value is derived by dividing EBITDA by Enterprise Value.

NRG Energy, Inc. (NYSE:NRG) presently has a current ratio of 1.50. The current ratio, also known as the working capital ratio, is a liquidity ratio that displays the proportion of current assets of a business relative to the current liabilities. The ratio is simply calculated by dividing current liabilities by current assets. The ratio may be used to provide an idea of the ability of a certain company to pay back its liabilities with assets. Typically, the higher the current ratio the better, as the company may be more capable of paying back its obligations.

The Price to book ratio is the current share price of a company divided by the book value per share. The Price to Book ratio for NRG Energy, Inc. NYSE:NRG is -9.463467. A lower price to book ratio indicates that the stock might be undervalued. Similarly, Price to cash flow ratio is another helpful ratio in determining a company’s value. The Price to Cash Flow for NRG Energy, Inc. (NYSE:NRG) is 8.480696. This ratio is calculated by dividing the market value of a company by cash from operating activities. Additionally, the price to earnings ratio is another popular way for analysts and investors to determine a company’s profitability. The price to earnings ratio for NRG Energy, Inc. (NYSE:NRG) is 43.574325. This ratio is found by taking the current share price and dividing by earnings per share.

Looking at some ROIC (Return on Invested Capital) numbers, NRG Energy, Inc. (NYSE:NRG)’s ROIC is 0.161194. The ROIC 5 year average is 0.043382 and the ROIC Quality ratio is 5.670396. ROIC is a profitability ratio that measures the return that an investment generates for those providing capital. ROIC helps show how efficient a firm is at turning capital into profits.

Free Cash Flow Growth (FCF Growth) is the free cash flow of the current year minus the free cash flow from the previous year, divided by last year’s free cash flow. The FCF Growth of NRG Energy, Inc. (NYSE:NRG) is -0.032357. Free cash flow (FCF) is the cash produced by the company minus capital expenditure. This cash is what a company uses to meet its financial obligations, such as making payments on debt or to pay out dividends. The Free Cash Flow Score (FCF Score) is a helpful tool in calculating the free cash flow growth with free cash flow stability – this gives investors the overall quality of the free cash flow. The FCF Score of NRG Energy, Inc. (NYSE:NRG) is 0.529325. Experts say the higher the value, the better, as it means that the free cash flow is high, or the variability of free cash flow is low or both.

The Value Composite Two of CenterPoint Energy, Inc. (NYSE:CNP) is 49. The VC2 is calculated using the price to book value, price to sales, EBITDA to EV, price to cash flow, price to earnings and shareholder yield.  Similarly, the Value Composite One (VC1) is a method that investors use to determine a company’s value.  The VC1 of CenterPoint Energy, Inc. (NYSE:CNP) is 37.  A company with a value of 0 is thought to be an undervalued company, while a company with a value of 100 is considered an overvalued company.  The VC1 is calculated using the same metrics as VC2, but without taking into consideration shareholder yield.

There are a large number of available methods for determining whether a firm is profitable or not. One of the most popular is the “Return on Assets” (aka ROA). This score reveals how profitable a stock is relative to its total assets. The Return on Assets for CenterPoint Energy, Inc. (NYSE:CNP) is 0.014646. This number is calculated by dividing net income after tax by the company’s total assets. A firm that manages their assets well will have a higher return, while a company that manages their assets poorly will have a lower return.

Looking at some ROIC (Return on Invested Capital) numbers, CenterPoint Energy, Inc. (NYSE:CNP)’s ROIC is 0.037067. The ROIC 5 year average is 0.053209 and the ROIC Quality ratio is 11.540483. ROIC is a profitability ratio that measures the return that an investment generates for those providing capital. ROIC helps show how efficient a firm is at turning capital into profits.

In terms of EBITDA Yield, CenterPoint Energy, Inc. (NYSE:CNP) currently has a value of 0.088447. This value is derived by dividing EBITDA by Enterprise Value.

The Current Ratio of CenterPoint Energy, Inc. (NYSE:CNP) is 2.13. The Current Ratio is used by investors to determine whether a company can pay short term and long term debts. The current ratio looks at all the liquid and non-liquid assets compared to the company’s total current liabilities. A high current ratio indicates that the company might have trouble managing their working capital. A low current ratio (when the current liabilities are higher than the current assets) indicates that the company may have trouble paying their short term obligations.

The Leverage Ratio of CenterPoint Energy, Inc. (NYSE:CNP) is 0.368439. Leverage ratio is the total debt of a company divided by total assets of the current and past year divided by two. Companies take on debt to finance their day to day operations. The leverage ratio can measure how much of a company’s capital comes from debt. With this ratio, investors can better estimate how well a company will be able to pay their long and short term financial obligations.

Piotroski F Score

The Piotroski F-Score is a scoring system between 1-9 that determines a firm’s financial strength. The score helps determine if a company’s stock is valuable or not. The Piotroski F-Score of CenterPoint Energy, Inc. (NYSE:CNP) is 6. A score of nine indicates a high value stock, while a score of one indicates a low value stock. The score is calculated by the return on assets (ROA), Cash flow return on assets (CFROA), change in return of assets, and quality of earnings. It is also calculated by a change in gearing or leverage, liquidity, and change in shares in issue. The score is also determined by change in gross margin and change in asset turnover.

Investors keeping an eye on shares of CenterPoint Energy, Inc. (NYSE:CNP) may be examining the company’s FCF or Free Cash Flow as well. FCF is a measure of the financial performance of a company. FCF is calculated by subtracting capital expenditures from operating cash flow. Currently, CenterPoint Energy, Inc. has an FCF score of 2.090095. The FCF score is an indicator that is calculated by combining free cash flow stability with free cash flow growth. Typically, a higher FCF score value would indicate high free cash flow growth. The company currently has an FCF quality score of 0.759284. The free quality score helps estimate free cash flow stability. FCF quality is calculated as the 12 ltm cash flow per share over the average of the cash flow numbers. With this score, it is generally considered that the lower the ratio, the better.