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How much a stock's price changes over time is a significant driver for most investors. Not only can price performance impact your portfolio, but it can help you compare investment results across sectors and industries as well.
Another factor that can influence investors is FOMO, or the fear of missing out, especially with tech giants and popular consumer-facing stocks.
What if you'd invested in NextEra Energy (NEE) ten years ago? It may not have been easy to hold on to NEE for all that time, but if you did, how much would your investment be worth today?
NextEra Energy's Business In-Depth
With that in mind, let's take a look at NextEra Energy's main business drivers.
Juno Beach, FL-based NextEra Energy Inc. (previously known as FPL Group Inc.) is a public utility holding company engaged in the generation, transmission, distribution, and sale of electric energy. The company has both regulated and non-regulated energy-related products and services, with operations in 27 states in the U.S. and four provinces in Canada. NextEra Energy was founded in 1925. The company serves nearly 10 million people through approximately 5 million customer accounts.
NextEra Energy's primary subsidiaries are Florida Power & Light Company (FPL), Gulf Power Company and NextEra Energy Resources LLC (NEER). NextEra Energy Capital Holdings, Inc. (NEECH) is a wholly owned subsidiary of NextEra, which owns and provides funds for NEER and other operating subsidiaries apart from FPL and its subsidiaries.In 2014, NextEra Energy formed NextEra Energy Partners, LP to own, manage and acquire contracted clean energy projects. As of Mar 31, 2020, the company had 45,500 megawatts of net generating capacity.
NextEra Energy produces a large volume of electricity from wind and solar energy. The company, through its subsidiaries, is advocating higher usage of clean fuel sources to generate electricity and aiming to reduce total carbon emissions by 67% within 2025 from 2005 base. The company aims to invest in the range of $50-$55 billion through 2022 to strengthen the existing operations.
FPL, Gulf Power and NEER contributed $11,662 million, $1,398 million and $5,046 million to its top line, respectively, in 2020. Corporate and Other negatively impacted its top line by $109 million in 2019.
On Jan 1, 2021, Gulf Power legally merged into FPL. Gulf Power will continue as a separate operating division during 2021, serving the existing customers under separate retail rates.
NEER is the competitive energy business of NextEra and plans to add 22,675-30,000 MW of clean power generation assets across the United States over the 2021-2024 time frame.
Amid the challenges posed by outbreak of COVID-19, the company ensured that its major capital projects continue to proceed without any hindrances.
Putting together a successful investment portfolio takes a combination of research, patience, and a little bit of risk. For NextEra Energy, if you bought shares a decade ago, you're likely feeling really good about your investment today.
According to our calculations, a $1000 investment made in July 2011 would be worth $5,487.32, or a 448.73% gain, as of July 19, 2021. Investors should keep in mind that this return excludes dividends but includes price appreciation.
The S&P 500 rose 228.78% and the price of gold increased 9.54% over the same time frame in comparison.
Analysts are forecasting more upside for NEE too.
NextEra Energy will benefit from its well-chalked out $50-$55 billion capital investment plan to strengthen infrastructure and add more clean assets to the generation portfolio. Despite the lingering pandemic, NextEra Energy through solid execution of organic projects, expansion of natural gas pipelines and strategic acquisitions is on course to achieve long-term growth objectives. It currently has a lot of renewable projects in its backlog. The company has ample liquidity to meet the current debt obligations. Its shares have outperformed the industry in the past year. However, its nature of business is subject to complex and comprehensive federal, state, as well as other regulations. If the planned nuclear plant outages last longer or an unplanned outage occurs, the company's operations and profitability might be hampered.
The stock is up 6.33% over the past four weeks, and no earnings estimate has gone lower in the past two months, compared to 1 higher, for fiscal 2021. The consensus estimate has moved up as well.
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