Using an unlevered Free Cash Flow to Firm (FCFF) model, we project NRG Energy, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 13.8% to 3.3% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 49, DPO 41, DIO 8). At a 6.2% WACC with mid-year discounting, the terminal value (80% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 13.5x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $244.62 per share, suggesting NRG is undervalued by 67.0% at the current price of $146.48.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 2,739 | 2,836 | 2,909 | 3,008 | 3,107 | 3,185 |
| (−) Net Interest | 717 | 743 | 762 | 788 | 814 | 834 |
| (+) D&A | 571 | 652 | 718 | 742 | 795 | 815 |
| EBITDA | 4,027 | 4,231 | 4,389 | 4,538 | 4,716 | 4,834 |
| (−) Tax | 632 | 654 | 671 | 694 | 717 | — |
| (−) CapEx | 674 | 698 | 716 | 741 | 765 | — |
| (−) ΔWC | 398 | 74 | 56 | 76 | 75 | — |
| Free Cash Flow (FCF) | 2,323 | 2,804 | 2,946 | 3,028 | 3,159 | — |
| Peers' EBITDA Multiple | 13.5x | |||||
| Terminal Value | 65,355 | |||||
| WACC / Discount Rate | 6.16% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 2,254 | 2,564 | 2,538 | 2,456 | 2,414 | 48,478 |
| Enterprise Value | 60,704 | |||||
| Projection Period | 12,226 | 20.1% | ||||
| Terminal Value | 48,478 | 79.9% | ||||
| (−) Current Net Debt | 12,028 | |||||
| Equity Value | 48,676 | |||||
| (÷) Outstanding Shares | 199M | |||||
| Fair Price | $245 | +67.0% | ||||
| WACC \ EV/EBITDA Exit Multiple | 9.5x | 11.5x | 13.5x | 15.5x | 17.5x |
|---|---|---|---|---|---|
| 4.2% | $193 | $232 | $272 | $312 | $351 |
| 5.2% | $182 | $220 | $258 | $296 | $333 |
| 6.2% | $173 | $209 | $245 | $281 | $317 |
| 7.2% | $163 | $198 | $232 | $266 | $301 |
| 8.2% | $154 | $187 | $220 | $253 | $286 |
Current price: $146.48. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.