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NextEra Beats on Q1 Earnings: ETFs in Focus

Zacks Equity Research

Shares of NextEra Energy Inc. NEE were up 1.64% at market close on Friday, April 21, 2017, as the company reported better than expected results. The company reported a 3.57% year-over-year increase in first quarter of 2017 revenues. Moreover, it beat the Zacks Consensus Estimate on both earnings and revenue (read: NextEra Energy Beats Q1 Earnings, Revenue Estimates).


Q1 Performance


NextEra Energy reported non-GAAP earnings per share (EPS) of $1.75, up 12.9% year over year and beating the Zacks Consensus Estimate of $1.56. Moreover, revenues of $3.972 billion came ahead of the consensus mark of $3.943 billion.


The company reported operating income of $2.405 billion, up from $1.234 billion a year ago.


Revenue Performance


Florida Power and Light revenue rose to $2.527 billion from $2.303 billion.


NextEra Energy Resources revenues dropped to $1.424 billion from $1.441 billion a year ago.


Corporate and Other revenues dropped to $21 million from $91 million a year ago.


Guidance


NextEra Energy expects adjusted EPS to be in a range of $6.35-$6.85 for 2017 and $6.80-$7.30 for 2018.


In the current scenario, let us discuss the following ETFs with a high exposure to NextEra Energy.


Utilities Select Sector SPDR Fund XLU


This fund is one of the most popular ETFs providing exposure to the U.S. utilities sector. It has AUM of $7.52 billion and charges a fee of 14 basis points a year. It has a 9.50% allocation to NextEra energy (as of April 24, 2017). The fund returned 9.45% in the past one year and 7.06% in the year-to-date time frame (as of April 24, 2017). It closed 0.51% higher on Friday, April 21, 2017. XLU currently has a Zacks ETF Rank of #4 (Sell) with a Medium risk outlook (read: See How ETFs React When Hawks Act Like Doves).


iShares U.S. Utilities ETF IDU


This ETF tracks the performance of the U.S. utilities sector and is relatively expensive. It has AUM of $808.40 million and charges a fee of 43 basis points a year. It has 8.24% allocation to NextEra Energy (as of April 21, 2017). The fund returned 9.35% in the past one year and 6.70% in the year-to-date time frame (as of April 24, 2017). It closed 0.58% higher on Friday, April 21, 2017. IDU currently has a Zacks ETF Rank of #4 with a Medium risk outlook.


Fidelity MSCI Utilities Index ETF FUTY


This ETF is a relatively cheaper bet on the U.S. utilities sector. It has AUM of $281.8 million and charges a fee of 8 basis points a year. It has 7.95% allocation to NextEra  (as of April 21, 2017). The fund returned 10.05% in the past one year and 6.71% in the year-to-date time frame (as of April 24, 2017). It closed 0.51% higher on Friday, April 21, 2017. FUTY currently has a Zacks ETF Rank of #4 with a Medium risk outlook.


Below is a year-to-date performance comparison of the funds and NextEra Energy Inc.
 


Source: Yahoo Finance


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NextEra Energy, Inc. (NEE): Free Stock Analysis Report
 
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ISHARS-US UTIL (IDU): ETF Research Reports
 
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