NextEra Energy Partners (NEP) Down 1.6% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for NextEra Energy Partners (NEP). Shares have lost about 1.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is NextEra Energy Partners due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

NextEra Energy Partners Lags Q4 Earnings Estimates

NextEra Energy Partners, LP incurred fourth-quarter 2018 loss of 39 cents per unit against the Zacks Consensus Estimate of earnings of 48 cents. In the year-ago quarter, the partnership had reported loss of $1.67 per unit. For the full year, the partnership reported earnings of $2.91 per unit against loss of $1.18 in 2017.

Revenues

In the quarter under review, the partnership posted revenues of $155 million, missing the Zacks Consensus Estimate of $299.1 million by 48.2%. Moreover, the top line declined 21.3% on a year-over-year basis.

NextEra Energy Partners’ total operating revenues for 2018 was $771 million, down 4.5% from $ 807 million in the year ago quarter.

In the quarter under review, cash available for distribution (CAFD) was $44 million, down 42.8% from the prior-year quarter’s tally. The decline was caused by the sale of its Canadian portfolio.

Quarterly Highlights

In the reported quarter, NextEra Energy Partners’ total adjusted operating expenses were $124 million, down 6% year over year.

The partnership delivered 15% growth in per unit distributions.

Financial Condition

NextEra Energy Partners had cash and cash equivalents of $147 million as of Dec 31, 2018 compared with $154 million as of Dec 31, 2017.

Long-term debt was $2,728 million as of Dec 31, 2018 compared with $4,218 million as of Dec 31, 2017.

Net cash from operating activities at the end of 2018 was $362 million, lower than $413 million in the year-ago quarter.

During 2018, the firm’s total capital expenditure was $25 million compared with $349 million a year ago.

Guidance

NextEra Energy Partners expects 12-15% annual growth in limited partner distributions through 2023. The partnership expects the annualized rate of the fourth-quarter 2019 distribution, which is payable in February 2020, in the range of $2.08-$2.14 per common unit.

The partnership continues to expect adjusted EBITDA of $1.2-$1.375 billion for 2019 and CAFD in the range of $410-$480 million.

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 11.72% due to these changes.

VGM Scores

Currently, NextEra Energy Partners has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

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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