Here's Why NRG Energy Surged 11.3% Higher in September

Shares of NRG Energy (NYSE: NRG) jumped 11.3% in September, according to data provided by S&P Global Market Intelligence.

The utility provider raised its forecasted earnings for this year and also announced a major infrastructure project in Texas in the month. Here's what investors need to know about the recent news and what it means for NRG stock.

NRG Energy raised its forecast for the year

In mid-September, NRG Energy announced a significant upward revision to its full-year financial outlook, thanks to strong operational performance. The company raised its adjusted earnings per share (EPS) forecast to $7.55–$8.15, up from the previous range of $6.75–$7.75.

Additionally, it increased its adjusted EBITDA guidance to a range of $3.875 billion and $4.025 billion, up from its earlier estimate of $3.725 billion to $3.975 billion.

CEO Larry Coben told investors, "For the second straight year, NRG is raising guidance after the summer, demonstrating the strength of our platform and our team's execution."

Major projects are in the pipeline

In other news, NRG secured a significant financial agreement for a major infrastructure project in Texas. On Sept. 26, Gov. Greg Abbott announced a loan agreement through the Texas Energy Fund, aimed at funding the construction of a 721-megawatt (MW) natural gas power plant near Baytown.

The total cost of the project is estimated at $936 million, with the Public Utility Commission of Texas providing a substantial 20-year, $562 million, low-interest loan, covering 60% of the costs at a 3% interest rate. This new power plant is expected to begin generating electricity by summer 2028 and will primarily serve the Electric Reliability Council of Texas (ERCOT) region.

Image source: Getty Images.

Additionally, NRG entered into a strategic agreement with LandBridge for a potential data center site in Reeves County, Texas, located within the Delaware Basin. This agreement involves the potential construction by NRG of a 1,100-MW, grid-connected natural gas power generation facility, contingent upon securing a power purchase agreement for the data center. If the project moves forward, it could be operational by the end of 2029.

NRG Energy is attractively priced

Earlier in September, Jefferies noted a preference for NRG Energy over peer Constellation Energy, citing NRG as offering better risk-adjusted returns at its current valuation. Scotiabank initiated coverage of NRG Energy with an outperform rating and assigned a $212 price target and also identified NRG as its "top pick for value." This optimism is something investors should consider as they research the stock.

The demand for energy from data centers is expected to increase, and with its strong position in Texas, NRG is well equipped to address this growing demand. Trading at 18 times forward earnings estimates, NRG is an attractively valued stock to invest in as energy demand will surge in the coming years.

Courtney Carlsen has positions in Constellation Energy. The Motley Fool has positions in and recommends Constellation Energy and Jefferies Financial Group. The Motley Fool has a disclosure policy.