A month has gone by since the last earnings report for NextEra Energy Partners (NEP). Shares have added about 2.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is NextEra Energy Partners due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
NextEra Energy Partners Posts Q2 Loss, Lags on Revenues
NextEra Energy Partners, LP incurred second-quarter 2019 loss of 49 cents per unit against the Zacks Consensus Estimate of earnings of 48 cents. In the year-ago quarter, the partnership reported earnings of $1.42 per unit.
In the quarter under review, the partnership generated revenues worth $219 million that missed the Zacks Consensus Estimate of $292 million by 26.8%. Moreover, the top line declined 2.7% on a year-over-year basis. The downside was caused by lower sales in the Texas pipelines service revenues segment.
In the quarter, NextEra Energy Partners’ total adjusted operating expenses were $152 million.
The partnership raised distributions by nearly 15% on a year-over-year basis.
In June, the partnership completed the acquisition of 611 megawatts of wind and solar projects from a subsidiary of NextEra Energy Resources, LLC.
Interest expenses rose to $207 million from $21 million in the year-ago quarter.
NextEra Energy Partners had cash and cash equivalents of $163 million as of Jun 30, 2019 compared with $147 million as of Dec 31, 2018.
Long-term debt was $3,676 million as of Jun 30 compared with $2,728 million as of Dec 31, 2018.
Net cash provided by operating activities at the end of the first six months of 2019 was $130 million, lower than $183 million in the first six months of 2018.
NextEra Energy Partners has extended expectations of annual growth. It expects 12-15% annual growth in limited partner distributions through 2024. The partnership continues to expect 2019 distribution growth at 15%.
The partnership expects adjusted EBITDA in the band of $1.2-$1.375 billion for 2019 and CAFD in the range of $485-$555 million that includes all contributions from PG&E-related projects.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 66.35% due to these changes.
At this time, NextEra Energy Partners has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, NextEra Energy Partners has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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