A month has gone by since the last earnings report for NextEra Energy (NEE). Shares have lost about 6.6% 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 the most recent earnings report in order to get a better handle on the important catalysts.
NextEra Energy's Q3 Earnings Surpass Estimates, Revenues Rise Y/Y
NextEra Energy, Inc. reported third-quarter 2024 adjusted earnings of $1.03 per share, which beat the Zacks Consensus Estimate of 98 cents by 5.1%. The bottom line was also up nearly 12.8% year over year. The uptick was driven by the solid performance of Florida Power & Light Company (“FPL”) and NextEra Energy Resources.
GAAP earnings per share for the third quarter were 90 cents compared with 60 cents in the year-ago period.
Total Revenues
In the third quarter, NextEra Energy’s operating revenues were $7.56 billion, which lagged the Zacks Consensus Estimate of $8.45 billion by 10.5%. The top line improved 5.5% year over year due to solid financial and operational performance at both businesses.
Segment Results Florida Power & Light Company: The segment’s revenues amounted to nearly $4.94 billion, down 9.8% from the prior-year figure of $5.47 billion. Its earnings came in at 63 cents per share compared with 58 cents recorded a year ago.
NextEra Energy Resources: Its revenues amounted to $2.58 billion, up 54.9% from the prior-year figure of $1.67 billion. The segment’s earnings came in at 47 cents per share comparison with 43 cents in the year-ago quarter.
Corporate and Other: Operating revenues for the reported quarter were $43 million compared with $28 million in the year-ago period. The operating loss in the third quarter was 7 cents per share, on par with the year-ago actual.
Highlights of the Release
FPL continued to execute against the segment’s capital plan and deliver outstanding value to its customers in Florida. Through the segment’s generation modernization efforts and solar portfolio build-out, FPL has saved its customers’ nearly $16 billion in fuel costs since 2001. FPL is also delivering best-in-class nonfuel O&M that is 70% better than the national average, saving its customers’ $3 billion every year compared with the average utility.
NextEra Energy Resources expanded its contracted renewables backlog by adding nearly 3 gigawatts (GW) of renewable projects in the quarter under discussion. Its backlog additions include nearly 100 megawatts (MW) of wind projects, 1,400 MW of solar projects, 1,400 MW of battery storage projects and 100 MW of wind repowering. The company’s renewables backlog is now nearly 24 GW.
NextEra Energy Resources entered into agreements with two Fortune 50 customers for the potential development of renewables and storage projects, totaling up to 10.5 GW between now and 2030, none of which is included in the reported backlog of projects.
Financial Update
NextEra Energy had cash and cash equivalents of nearly $2.26 billion as of Sept. 30, 2024, compared with $2.7 billion on Dec. 31, 2023.
Long-term debt, as of Sept. 30, 2024, was $66.1 billion, up from $61.4 billion on Dec. 31, 2023.
Cash flow from operating activities in the first nine months of 2024 was $11.27 billion compared with $8.42 billion in the prior-year quarter.
NextEra Energy’s Guidance
NextEra Energy reaffirmed 2024 earnings guidance of $3.23-$3.43 per share. The midpoint of the guided range is $3.33 per share, lower than the Zacks Consensus Estimate of $3.40.
For 2025, the company expects earnings per share of $3.45-$3.70. Through 2027, NextEra Energy expects earnings per share to grow 6-8% per year, taking the 2024 adjusted earnings per share as the base. This translates to earnings per share of $3.85-$4.32 for 2027.
The company continues to expect nearly 10% annual dividend per share growth through at least 2026, subject to the approval of the board of directors.
The company’s unit, Energy Resources, currently aims to add 36,500-45,500 MW of renewable power projects to its portfolio in the 2024-2027 span.
How Have Estimates Been Moving Since Then?
Fresh estimates followed an upward path over the past two months.
VGM Scores
At this time, NextEra has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
NextEra has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
NextEra is part of the Zacks Utility - Electric Power industry. Over the past month, Avangrid (AGR), a stock from the same industry, has gained 1.3%. The company reported its results for the quarter ended September 2024 more than a month ago.
Avangrid reported revenues of $2.08 billion in the last reported quarter, representing a year-over-year change of +5.5%. EPS of $0.55 for the same period compares with $0.27 a year ago.
Avangrid is expected to post earnings of $0.62 per share for the current quarter, representing a year-over-year change of -36.1%. Over the last 30 days, the Zacks Consensus Estimate has changed +1.1%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Avangrid. Also, the stock has a VGM Score of D.
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