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NextEra Energy Might Miss It

Zacks Equity Research

NextEra Energy (NEE) will release its fourth quarter 2012 financial results before the market bell on Jan 29, 2013. In the prior quarter, this electric utility reported a negative surprise of 9.35%. NextEra currently has a Zacks Rank #2 (Buy). Let’s see how things are shaping up at NextEra prior to this announcement.

Factors to Consider This Quarter

NextEra Energy produces nearly 70% of its electricity through natural gas plants and renewable sources. The company continues to invest in non-polluting plants for new generation. In Dec 12, NextEra filed a proposal to build a natural gas pipeline, which will allow it to generate more power from natural gas serving residents of the state of Florida.

However, the adverse market conditions continue to negatively impact the performance of the Energy Resource segment. This tepid outlook is expected to influence the fourth quarter results as well. Other negative triggers in the quarter include the effect of Hurricane Sandy disrupting operations in NextEra’s service territories.

Earnings Whispers

Accordingly, our proven model does not conclusively show that NextEra Energy is likely to beat earnings this quarter. That is because a stock needs to have both a positive earnings Expected Surprise Prediction (ESP) (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank of #1, 2 or 3 for this to happen. This is not the case here.

Negative Zacks ESP: This is because the Most Accurate estimate stands at 94 cents while the Zacks Consensus Estimate is higher at 96 cents, resulting in -2.08% ESP.

Zacks Rank #2 (Buy): NextEra’s Zacks Rank #2 complicates the forecasting power of ESP making surprise prediction difficult. We caution investors against the stock going into the earnings announcement, as a negative Zacks ESP lowers the possibility of an earnings surprise.

Other Stocks to Consider

Other companies you may want to consider on the basis of our model which shows that they have the right combination of elements to post an earnings beat this quarter:

Wisconsin Energy Corp. (WEC) has earnings ESP of +2.38% and carries a Zacks Rank #1 (Strong Buy).

Clean Energy Fuels Corp. (CLNE) has earnings ESP of +87.50% and carries a Zacks Rank #2 (Buy).

Public Service Enterprise Group Inc. (PEG) has earnings ESP of +5.26% and carries a Zacks Rank #3 (Hold).

Read the Full Research Report on WEC

Read the Full Research Report on NEE

Read the Full Research Report on PEG

Read the Full Research Report on CLNE

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