Mirant Corporation (MIR), the electricity provider, has surprised on estimates 3 out of the last 4 quarters by an average of 9.87%. The stock is cheap. MIR trades at just 5.4x forward earnings.

Company Description

Mirant Corporation sells electricity across the United States. The company has 11 power plants near high population centers.

Mirant Easily Surprised in the First Quarter

On May 8, Mirant reported first-quarter 2009 results that surprised on estimates by 38.60%. Earnings per share were 79 cents compared to 66 cents in the year ago quarter. Analysts expected 57 cents.

The year over year gain was the result of lower realized gross margin and higher net interest expense.

At the end of the quarter, the company had cash and cash equivalents of $1.905 billion. $424 million of that was restricted at Mirant North America and its subsidiaries and not available for distribution to Mirant.

As of Mar 31, the company also had debt of $2.637 billion.

Consensus Estimates Move Higher

Second quarter and 2009 consensus estimates have been trending higher over the last few months despite the company having lowered its EBITDA guidance to $873 million from $897 million for the full year in its first quarter report.

Second quarter consensus increased 4 cents to 55 cents over the last 90 days. The company is scheduled to report second quarter results on Aug 7.

2009 consensus estimates climbed 7.4% over the prior 3 months to $3.20 from $2.98 per share. Analysts now expect 23.17% year over year earnings growth in 2009.

Value Fundamentals

Mirant is a Zacks #1 Rank (strong buy) stock. It has strong value characteristics with a price-to-book of 0.60. The company’s 1-year return on equity (ROE) is 13.51%.

Zacks Investment Research
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