NRG Energy Inc. (NYSE: NRG) has announced that it would buy back $251 million worth of its common stock, under its capital allocation program for 2015. With this move, the company aims to boost its share value and increase its earnings per share. Additionally, NRG seems to have failed in its pursuit of a pioneer status in renewable energy. Investors have grown weary of the heavy investments made by the company, which does not translate to sufficient profits in the long-run.
In a bid to try and address investor concerns, NRG announced that it would be spinning off its green energy wing, to a new company GreenCo. The new company will receive a one-time loan from NRG of $125 million, due to be paid in 2016. However, it should be noted here that NRG has only recently made a push to gain a foothold in the home-solar market and the recent results are not enough to make an informed decision. Furthermore, the majority of efforts by NRG have been towards Houston, which ranked 33 out of 40 cities for home-solar market penetration.
The company’s new allocation program aims to reduce corporate debt, repurchase of NRG shares and fund future projects. In the 1H2015, the directors of the company had authorized the repurchase of $281 million worth of NRG shares. Year-to-date the company has bought back 9.1 million shares, worth $230 million, leaving room for a buyback of $51 million worth NRG shares. As the 2H2015 is underway, the directors have decided to allocate further $200 million to the share repurchase program.
NRG has also revealed that the company has decided to return a total of $200 million to shareholders this year, in terms of annual dividend. So far, the company has returned $102 million, for the 1H2015. This dividend was 12.1% higher than the one issued during the same period in the preceding year.
NRG Energy Inc. (NYSE: NRG) traded 10.10 million shares during the September 24 session and recorded a surge of 0.32% during the September 24 session to reach a close at $15.48.