If you have ever wondered whether NRG Energy is undervalued or overpriced right now, you are not alone. Many investors are asking the same question about this high-performing stock.
Despite a slight dip of 3.6% over the last week and 6.6% over the past month, NRG Energy has posted a 71.6% gain year-to-date and a 69% return over the past year.
NRG’s stock price has recently responded to several pivotal developments, including changes in energy market dynamics, regulatory updates, and the company’s ongoing push into decarbonization and innovative energy solutions. These headlines have influenced investor sentiment and highlight the shifting landscape in which NRG is operating.
On the valuation front, NRG scores a 3 out of 6 in our value assessment here, indicating some undervalued characteristics but also suggesting room for further investigation. Next, we will break down how different valuation methods apply to NRG Energy, and at the end of the article, reveal an approach that may provide the most comprehensive view yet.
NRG Energy delivered 69.0% returns over the last year. See how this stacks up to the rest of the Electric Utilities industry.
The Discounted Cash Flow (DCF) model estimates a company’s intrinsic value by projecting its future cash flows and discounting them back to today’s dollars. This method is widely used because it focuses on the actual cash a business is expected to generate, offering a fundamental view of value.
For NRG Energy, the latest reported Free Cash Flow (FCF) stands at $2.03 Billion. Analyst estimates suggest steady growth, with projections reaching $3.19 Billion by 2026 and $4.68 Billion by 2029. Beyond that, Simply Wall St extrapolates further increases, projecting FCF of $5.38 Billion by 2035. All cash flows are in US dollars.
Based on these projections, the DCF model calculates NRG Energy’s intrinsic value at $567.34 per share. When compared to the current market price, this implies the stock is trading at a 71.9% discount to its estimated fair value. This significant discount suggests the market may be undervaluing the company’s potential future cash flows.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests NRG Energy is undervalued by 71.9%. Track this in your watchlist or portfolio, or discover 927 more undervalued stocks based on cash flows.
NRG Discounted Cash Flow as at Nov 2025
Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for NRG Energy.
The Price-to-Earnings (PE) ratio is widely regarded as an effective valuation metric for profitable companies like NRG Energy because it directly links a company’s market price to its earnings performance. Investors gravitate towards the PE ratio as it helps gauge whether a stock is trading at a reasonable multiple of its earnings, making it easier to compare companies in the same sector.
Interpreting a PE ratio requires consideration of growth expectations and company risk. Rapid growth or lower perceived risk often justifies a higher multiple, while slower growth or elevated risk typically commands a lower one. Therefore, understanding what constitutes a “normal” or “fair” PE for a specific business depends on these dynamics as well as broader market trends.
NRG Energy currently trades at a PE ratio of 22.2x. This compares to an industry average PE of 20.6x for Electric Utilities and a peer average of 19.0x. However, these benchmarks do not account for NRG’s unique growth profile, profit margins, or risk factors. That’s where the Simply Wall St “Fair Ratio” comes in. It estimates a fair PE for NRG at 39.8x based on a comprehensive evaluation of factors including its growth outlook, profitability, industry context, and market cap. This approach leads to a more accurate benchmark, as it integrates company-specific fundamentals rather than leaning solely on broad averages.
With the current PE ratio of 22.2x below the fair ratio of 39.8x, this analysis suggests that NRG Energy could be undervalued relative to its long-term prospects.
Result: UNDERVALUED
NYSE:NRG PE Ratio as at Nov 2025
PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1430 companies where insiders are betting big on explosive growth.
Earlier, we mentioned there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is simply your story—your perspective about a company’s future—expressed in financial terms like expected revenue, earnings, profit margins and, ultimately, a fair value. Narratives link what you believe about a business, such as NRG Energy’s earnings growth from new data center agreements or its evolving risk profile, to an explicit financial forecast and a fair value estimate. This bridges the gap between “the story” and “the numbers.”
They are accessible and easy to use, and available on Simply Wall St’s platform within the Community page, where millions of investors share, compare and discuss their views. Narratives make decisions clearer by continuously showing you how your fair value stacks up against the current market price, helping you decide when to buy, hold or sell. They also update dynamically when new information arrives, so your investment view stays in tune with the latest news or company results. For instance, some NRG Energy investors are bullish, forecasting $1.9 billion in 2028 earnings and targeting a $203 share price, while others are more cautious, expecting just $1.4 billion and setting their fair value at $92. Narratives let you back your conviction with numbers and see exactly how and why your perspective may differ from the crowd.
Do you think there’s more to the story for NRG Energy? Head over to our Community to see what others are saying!
NYSE:NRG Community Fair Values as at Nov 2025
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include NRG.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
