NRG Energy Used This Accounting Trick to Make Its Earnings Look Less Volatile

Core Viewpoint - NRG Energy has experienced significant stock price volatility due to its large derivatives-trading operation, which has led to a complex earnings situation for the company [1]. Group 1: Company Performance - NRG Energy's stock has increased by 65% year-to-date, making it one of the biggest gainers in the S&P 500 [1]. - The company's current trading valuation is at 23 times its trailing earnings [1]. Group 2: Accounting Changes - An accounting change implemented late last year allows NRG to smooth its earnings results, effectively masking some of the volatility associated with its derivatives trading [1]. - This accounting adjustment presents a dilemma for investors, as it complicates the assessment of the company's true financial performance [1].