U.S. Markets closed

Will NextEra (NEE) Miss Earnings Estimates This Quarter?

Zacks Equity Research

NextEra Energy (NEE) will release its fourth quarter 2013 financial results before the market open on Jan 28, 2014. In the prior quarter, this electric utility reported a positive surprise of 2.14%. 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 the majority of its electricity from natural gas plants and renewable sources. The company continues to invest in non-polluting plants for new generation.

During 2013, NextEra Energy has taken quite a few initiatives to reduce expenses. The company’s Project Momentum is aimed at driving operational efficiency. The company has already incurred some cots for these initiatives. These initiatives are likely to have a combined negative impact of 16 to 18 cents on 2013 earnings.

NextEra hopes to achieve compound annual earnings growth of 5% to 7% over the 2012-2016 time frame on the back of these initiatives.

Earnings Whispers

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 ESP (Expected Surprise Prediction) 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 combined with a negative ESP complicates the forecasting power, 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

The following are the 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:

FirstEnergy Corp. (FE) has earnings ESP of +1.45% and carries a Zacks Rank #3 (Hold).

NiSource Inc. (NI) has earnings ESP of +2.22% and carries a Zacks Rank #3 (Hold).

Entergy Corporation (ETR) has earnings ESP of +16.00% and carries a Zacks Rank #3 (Hold).

Read the Full Research Report on NEE
Read the Full Research Report on NI
Read the Full Research Report on ETR
Read the Full Research Report on FE

Zacks Investment Research