If you think that the financials for independent power producer NRG Energy
Revenue and earnings both appear to have exceeded expectations for the quarter. Operating revenue rose 33%, while net income per share more than tripled -- and that's without adding back some theoretically one-time items.
Nice as that is, earnings and revenue aren't really the main drivers of stock valuation here -- adjusted EBITDA and free cash flow garner most of the attention. Adjusted EBITDA, without mark-to-market adjustments for hedging deals, grew 30%. Free cash flow doesn't look quite so good, until you realize that the calculation excludes more than $400 million because of collateral obligations for hedging deals.
So what do I like about NRG? Well, it seems that power prices are recovering, and NRG owns quite a bit of lower-cost coal-fired generating assets. It also benefits from having a higher percentage of its power base devoted to baseload supply, compared to others like Dynegy
I can understand why investors who got burned a few years back by Calpine
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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).