Wall Street is almost ceaselessly weird. Sometimes the Street will smack down a strong company by a double-digit amount because earnings missed expectations by a few pennies. Other times it will happily overlook near-term shortfalls because it has bought into the long-term term story hook, line, and sinker. Such would seem to be the case at NRG Energy (NYSE:NRG), as investors essentially looked past a disappointing quarter and lower near-term guidance in favor of a brightening future outlook. All things considered, the stock has held up better since the earnings release than might have been expected.

Results for this independent power producer continue to be a little unusual. Revenue nearly tripled from the year-ago quarter and operating income was up nearly tenfold, but adjusted EBITDA is what gets the attention. To that end, adjusted EBITDA was up 205%, with underlying growth in the "classic" business of about 17%. Keep in mind that with so much in the way of contract amortization, mark-to-market adjustments, and various other items and reversals, earnings per share here is a different animal than for a utility like Duke Energy (NYSE:DUK) or Dominion Resources (NYSE:D).

Despite those sometimes-confusing differences, I'd still encourage investors to take the time to get to understand independent power producers like NRG, Mirant (NYSE:MIR), and Dynegy (NYSE:DYN). In the case of NRG, there looks to be good potential for generating excess free cash flow (note the company's large share-repurchase commitment).

In addition, the recent heat wave has highlighted the fact that there are areas of the country that could do with more power capacity. Now some may be worried that NRG's capacity expansions will lower pricing and returns to unacceptable levels, particularly in Texas, where TXU (NYSE:TXU) is also expanding. I think that's a valid concern, but one that seems to be mitigated by NRG's willingness to adhere to certain standards for moving forward with investments, particularly long-term purchase contracts (with matching fuel supply deals) and 10-year return-on-investment hurdles.

Of course, there's no such thing as a risk-free opportunity. In particular, there's the risk that gas prices (which generally determine power rates in most markets) could fall, but coal prices (which provide the cheapest source of power) could also rise and hurt profitability. Nevertheless, I'd bet on an improving energy market for the next few years, so there's enough potential here to merit a second look.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).