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NextEra Energy, Inc. (NYSE:NEE) last week reported its latest second-quarter results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Sales fell 21% shy of analyst expectations, coming in at US$4.2b. Statutory earnings per share slightly exceeded forecasts at US$2.59 but overall it looks like the analystswere a bit over-enthusiastic on revenues. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
After the latest results, the eleven analysts covering NextEra Energy are now predicting revenues of US$20.8b in 2020. If met, this would reflect a meaningful 9.5% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to grow 10% to US$8.04. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$20.6b and earnings per share (EPS) of US$8.05 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
The consensus price target rose 6.9% to US$281despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of NextEra Energy's earnings by assigning a price premium. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on NextEra Energy, with the most bullish analyst valuing it at US$330 and the most bearish at US$246 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting NextEra Energy's growth to accelerate, with the forecast 9.5% growth ranking favourably alongside historical growth of 1.9% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 3.1% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that NextEra Energy is expected to grow much faster than its industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for NextEra Energy going out to 2024, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 2 warning signs for NextEra Energy you should be aware of, and 1 of them is significant.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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