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NextEra (NEE) Down 0.3% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research

It has been about a month since the last earnings report for NextEra Energy (NEE). Shares have lost about 0.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is NextEra due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

NextEra Energy Beats Q3 Earnings & Revenue Estimates

NextEra Energy, Inc. reported third-quarter 2019 adjusted earnings of $2.39 per share, beating the Zacks Consensus Estimate of $2.27 by 5.3%. Moreover, the reported earnings were up 10.1% on a year-over-year basis.

The earnings growth was attributed to solid contribution from all its business segments.

On a GAAP basis, NextEra Energy recorded earnings of $1.81 per share, down 13.8% from $2.1 reported in the year-ago quarter.

Total Revenues

In the third quarter, NextEra Energy’s operating revenues were $5,572 million, surpassing the Zacks Consensus Estimate of $5,244 million by 6.3%. In addition, the reported revenues were up 26.2% year over year.

Segmental Results

Florida Power & Light Company: Revenues from the segment amounted to $3,491 million, up 2.7% from the prior-year figure of $3,399 million. The segment’s earnings came in at $1.40 per share, up 2.2% from $1.37 recorded in the prior-year quarter.

Gulf Power Company: Total segment revenues amounted to $440 million. This segment contributed 16 cents to its earnings in the reported quarter.

NextEra Energy Resources: Revenues from the segment amounted to $1,619 million, up 59% from the prior-year quarter. Quarterly earnings from the segment came in at 87 cents per share, up 19.2% from 73 cents in the year-ago quarter.

Corporate and Other: The segment’s operating loss in the reported quarter was 4 cents per share versus earnings of 7 cents in the year-ago period.
 
Highlights of the Release

In the reported quarter, NextEra Energy’s total operating expenses were up 15.4% from the prior-year level to $3,979 million.

Interest expenses in the quarter were $746 million, up a whopping 344.1% from the year-ago period.

In the reported quarter, Florida Power & Light Company’s total average customer count was up 100,000 on a year-over-year basis.

NextEra Energy Resources expanded the contracted renewables backlog by adding 1,375 MW of renewable projects during third-quarter 2019.

Financial Update

NextEra Energy had cash and cash equivalents of $1,131 million as of Sep 30, 2019 compared with $638 million on Dec 31, 2018.

Long-term debt as of Sep 30, 2019 was $36.14 billion, up from $26.78 billion on Dec 31, 2018.

Cash flow from operating activities in the first nine months of 2019 was $6.24 billion compared with $5.2 billion in the comparable prior-year period.

Guidance
 
NextEra Energy reiterated its 2019 adjusted earnings guidance in the range of $8.00-$8.50. The company’s earnings are expected to grow at a compound annual rate of 6-8% per year through 2021, off its base of $7.70 in 2018. NextEra Energy expects 2022 adjusted earnings per share in the range of $10-$10.75, indicating 6-8% growth from 2021 EPS.

It plans to hike dividend by 12-14% per year through at least 2020, off a 2017 base of $3.93.

NextEra Energy currently aims to add 11,500-18,500 MW of renewable power projects in its portfolio within the 2019-2022 time frame.
 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

Currently, NextEra has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, NextEra has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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