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NextEra (NEE) Up 4.5% Since Last Earnings Report: Can It Continue?

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  • NEE

It has been about a month since the last earnings report for NextEra Energy (NEE). Shares have added about 4.5% 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 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 catalysts.

NextEra Q3 Earnings Outpace Estimates, Revenues Miss

NextEra Energy, Inc. reported third-quarter 2021 adjusted earnings of 75 cents per share, which beat the Zacks Consensus Estimate of 72 cents by 4.2%. The bottom line was also up 11.9% from 67 cents per share in the prior-year quarter.

This year-over-year improvement was owing to the solid performance of all businesses and the expansion of its customer base.
 
On a GAAP basis, the company recorded earnings of 23 cents compared with 62 cents per share in the year-ago quarter.

Total Revenues

For the third quarter, NextEra’s operating revenues were $4,370 million, which lagged the Zacks Consensus Estimate of $5,896 million by 25.9%. The top line also dipped 8.7% year over year.

Segment Results

Florida Power & Light Company (FPL): Revenues amounted to $3,694 million, up 6.9% from the prior-year figure of $3,455 million. Segmental earnings came in at 42 cents per share, up 10.5% from 38 cents recorded a year ago.

Gulf Power Company (Gulf Power): Total revenues came in at $440 million, up 8.9% from the year-earlier figure. Earnings per share totaled 5 cents for the reported quarter, on par with the year-ago level.

NextEra Energy Resources: Revenues summed $258 million, down 72.9% from the prior-year quarter. Quarterly earnings came in at 31 cents per share compared with 19 cents in the year-ago quarter.

Corporate and Other: Operating loss for the reported quarter was 3 cents per share from this segment compared with a loss of 4 cents in the year-ago period.

Highlights of the Release

During the quarter, FPL continued with major capital projects. The 409-megawatt (MW) FPL Manatee Energy Storage Center, which will be the world's largest integrated solar-powered battery system, is now 75% complete.

For third-quarter 2021, FPL's average number of customers increased nearly 77,500 from the prior-year period.

NextEra Energy Resources expanded the contracted renewables backlog by adding 2,160 MW of renewable projects during the September quarter. Energy Resources currently has more than 18,100 MW in its backlog of signed contracts.

During the quarter, FPL announced a comprehensive, four-year rate settlement agreement that would phase in new rates starting January 2022.

Financial Update

The company had cash and cash equivalents of $692 million as of Sep 30, 2021 compared with $1,105 million on Dec 31, 2020.

Long-term debt as of Sep 30, 2021 was $48.1 billion, up from $41.94 billion on Dec 31, 2020.

Cash flow from operating activities for the first nine months of 2021 was $6,236 million compared with $6,631 million in the comparable prior-year period.

Guidance

NextEra reiterated 2021 earnings expectation in the range of $2.40-$2.54 per share. The metric is projected to see a CAGR of 6-8% per year through 2023, off a 2021 base. As a result, its earnings per share guided range for 2022 and 2023 is estimated at $2.55-$2.75 and $2.77-$2.97, respectively.

The company’s unit, Energy Resources currently aims to add 22,675-30,000 MW of renewable power projects to its portfolio within the 2021-2024 time frame.

 

How Have Estimates Been Moving Since Then?

Estimates revision followed a downward path over the past two months.

VGM Scores

Currently, NextEra has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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.

Outlook

NextEra has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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