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NextEra Energy Gains from Renewable Investments: Time to Buy?

Zacks Equity Research

NextEra Energy, Inc. NEE is gaining from investments made toward strengthening infrastructure and ongoing capital projects. Upon completion, these projects will aid the company to serve its expanding customer base more efficiently. Additionally, its focus on clean energy has helped it lower carbon emissions from previous levels.

However, the company's nature of business, subject to comprehensive federal and state regulations, as well as the impact of unpredictable weather conditions may derail normal operations and impact profitability to some extent.

The company’s primary subsidiary, Florida Power & Light Company (“FPL”) reached another milestone in support of its ongoing strategy of providing clean affordable energy services. The unit has got the official nod from the Florida Public Service Commission to shut down operations of the St. Johns River Power Park coal-fired plant and has recently closed operations in the plant, This initiative is projected to prevent 5.6 million tons of carbon dioxide emissions annually and save an estimated $183 million, for FPL customers.

With the shutting down of the plant, it also inaugurated four new solar power plants. The new solar plants came online on Jan 1, 2018. Further, it aims to bring online another four solar plants by Mar 1, 2018. Notably, the plants will encompass approximately 2.6 million solar panels in total, and have the capacity of generating 74.5 megawatts (MW). This reflects the company’s further progress in clean energy space.

Further, NextEra Energy and FPL continue to work progressively toward increasing customer base. In the third quarter of 2017, earnings came in at $1.19 per share, up 7.2% from the prior-year quarter figure driven mainly by 62,000 customer additions during the quarter.

On the flip side, FPL depends on the Florida Public Service Commission for timely rate relief and cost recovery approvals, denials of which could affect the company’s operational results. These factors along with delay in completion of projects may cause cost overruns and adversely impact profitability.

Price Movement

NextEra Energy returned 29.9% in the last 12 months, outperforming the 6.6% rally of the industry it belongs to.

Zacks Rank & Key Picks

Other top-ranked stocks in the same space include Pampa Energia S.A. PAM, Algonquin Power & Utilities Corp. AQN and WEC Energy Group, Inc. WEC. While Pampa Energia sports a Zacks Rank #1 (Strong buy), Algonquin Power and WEC Energy carry the same Zacks Rank as NextEra Energy. You can see the complete list of today’s Zacks #1 Rank stocks here.

Algonquin Power delivered an average surprise of 33.17% in the trailing four quarters. Its 2017 earnings growth estimate is pegged at 25.58%.

WEC Energy delivered positive average earnings surprise of 3.08% in the last four quarters. Its 2017 earnings growth estimate is pegged at 4.04%.

Pampa Energia delivered positive average earnings surprise of 585.71% in the last four quarters. Its 2018 earnings growth estimate is pegged at 61.30%.

Zacks Editor-in-Chief Goes ""All In"" on This Stock

Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.