What: Shares of NRG Yield, Inc (NYSE:NYLD) plunged as much as 15% today after issuing a disappointing earnings report.
So what: Operating revenue increased from $173 million a year ago to $217 million but cash available for distribution fell from $43 million to $26 million. Since cash for distribution is the main goal of yieldcos that's a bad result for NRG Yield.
Management also lowered full-year 2015 adjusted EBITDA guidance from $690 million to $660 million and lowered cash available for distribution guidance by $35 million to $160 million.
Now what: Historically low wind generation production was blamed for the miss, but it's concerning for investors looking for cash flow from the stock. Long-term, this is probably not an ongoing problem but it shows that renewable energy can have ups and downs like other energy resources. I would be cautious buying NRG Yield given the falling cash flows but if management can prove in coming quarters it was indeed a one-time event then I would feel comfortable buying in.
Travis Hoium owns shares of NRG YIELD INC. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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