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NextEra (NEE) Pre-Q2 Earnings Analysis: Should You Buy or Hold?
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NextEra Energy (NEE - Free Report) is expected to report an improvement in its bottom line when it reports second-quarter 2024 results on Jul 24, before market open.
The Zacks Consensus Estimate for NEE’s second-quarter revenues is pegged at $7.27 billion, indicating a 1.3% decline from the year-ago reported figure.
The consensus estimate for earnings is pegged at 93 cents per share. The Zacks Consensus Estimate for NEE’s second-quarter earnings has moved up 2.2% in the past 60 days. The estimate suggests year-over-year growth of 5.7%.
Image Source: Zacks Investment Research
Solid Earnings Surprise History
NextEra’s earnings beat the Zacks Consensus Estimates in the trailing four quarters, the average surprise being 8.8%.
Our proven model predicts an earnings beat for NextEra this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is the case here, as you can see below.
You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Earnings ESP: NextEra has an Earnings ESP of +1.44%.
The demand for clean electricity is rising in its service territories and NextEra Energy can meet it through strategic investment to strengthen and upgrade its infrastructure. NextEra’s unit, Florida Power & Light Company (“FPL”), is benefiting from the improving economic condition of the state. The addition of new customers boosts demand and drives earnings.
NextEra’s unit, Energy Resources, is leveraging its competitive advantages to efficiently meet rising commercial and industrial customer demand through electricity generated from clean energy projects. The company’s unit continues to add new projects to meet customer demand. Energy Resources has more than 21 GW in the backlog of signed contracts, which provides clear visibility into the ongoing expansion of clean power generation.
The company has been gaining from and will continue to benefit from rising demand from big data centers and higher demand from oil and gas companies in the Permian Basin region. Courtesy of these positive factors, the company expects its earnings per share to improve in the range of 6-8% annually.
Price Performance and Valuation
NEE’s shares have gained 20.4% year to date compared with the industry’s rally of 5.7%.
Image Source: Zacks Investment Research
The company is currently valued at a premium compared to its industry on a forward 12-month P/E basis. The company is trading at a forward 12 months P/E multiple of 20.24 compared with the industry average of 13.63.
Image Source: Zacks Investment Research
Some of the other operators in the same industry, like The Southern Company (SO - Free Report) , PG&E (PCG - Free Report) and American Electric Power (AEP - Free Report) , are trading cheaper compared with NextEra Energy. The shares of SO, PCG and AEP are trading at forward 12 months P/E multiple of 19.54, 12.71 and 16.12, respectively.
Investment Thesis
NextEra Energy continues to gain from improving economic conditions in Florida, which is adding new customers and creating fresh demand for its services. NextEra Energy's investment in increasing clean energy production volumes, and expansion of operations through organic and inorganic initiatives is also boosting its prospects. The partnership with Entergy Corporation to develop storage projects will play a vital role in the clean energy transition.
Unfavorable supply costs and increasing indirect input costs can, however, adversely impact performance. Given its high valuation at present, it is better to hold positions in the stock.
To Sum Up
Improving demand from customers in Florida and Energy Resources’ ability to efficiently meet rising commercial and industrial customer demand are expected to drive the performance of NextEra Energy.
Given the improvement in earnings estimates, it will be wise to remain invested in this utility at this moment.
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NextEra (NEE) Pre-Q2 Earnings Analysis: Should You Buy or Hold?
NextEra Energy (NEE - Free Report) is expected to report an improvement in its bottom line when it reports second-quarter 2024 results on Jul 24, before market open.
The Zacks Consensus Estimate for NEE’s second-quarter revenues is pegged at $7.27 billion, indicating a 1.3% decline from the year-ago reported figure.
The consensus estimate for earnings is pegged at 93 cents per share. The Zacks Consensus Estimate for NEE’s second-quarter earnings has moved up 2.2% in the past 60 days. The estimate suggests year-over-year growth of 5.7%.
Image Source: Zacks Investment Research
Solid Earnings Surprise History
NextEra’s earnings beat the Zacks Consensus Estimates in the trailing four quarters, the average surprise being 8.8%.
NextEra Energy, Inc. Price and EPS Surprise
NextEra Energy, Inc. price-eps-surprise | NextEra Energy, Inc. Quote
What the Zacks Model Unveils
Our proven model predicts an earnings beat for NextEra this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is the case here, as you can see below.
You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Earnings ESP: NextEra has an Earnings ESP of +1.44%.
Zacks Rank: NextEra Energy currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Likely to Have Shaped NEE’s Q2 Earnings
The demand for clean electricity is rising in its service territories and NextEra Energy can meet it through strategic investment to strengthen and upgrade its infrastructure. NextEra’s unit, Florida Power & Light Company (“FPL”), is benefiting from the improving economic condition of the state. The addition of new customers boosts demand and drives earnings.
NextEra’s unit, Energy Resources, is leveraging its competitive advantages to efficiently meet rising commercial and industrial customer demand through electricity generated from clean energy projects. The company’s unit continues to add new projects to meet customer demand. Energy Resources has more than 21 GW in the backlog of signed contracts, which provides clear visibility into the ongoing expansion of clean power generation.
The company has been gaining from and will continue to benefit from rising demand from big data centers and higher demand from oil and gas companies in the Permian Basin region. Courtesy of these positive factors, the company expects its earnings per share to improve in the range of 6-8% annually.
Price Performance and Valuation
NEE’s shares have gained 20.4% year to date compared with the industry’s rally of 5.7%.
Image Source: Zacks Investment Research
The company is currently valued at a premium compared to its industry on a forward 12-month P/E basis. The company is trading at a forward 12 months P/E multiple of 20.24 compared with the industry average of 13.63.
Image Source: Zacks Investment Research
Some of the other operators in the same industry, like The Southern Company (SO - Free Report) , PG&E (PCG - Free Report) and American Electric Power (AEP - Free Report) , are trading cheaper compared with NextEra Energy. The shares of SO, PCG and AEP are trading at forward 12 months P/E multiple of 19.54, 12.71 and 16.12, respectively.
Investment Thesis
NextEra Energy continues to gain from improving economic conditions in Florida, which is adding new customers and creating fresh demand for its services. NextEra Energy's investment in increasing clean energy production volumes, and expansion of operations through organic and inorganic initiatives is also boosting its prospects. The partnership with Entergy Corporation to develop storage projects will play a vital role in the clean energy transition.
Unfavorable supply costs and increasing indirect input costs can, however, adversely impact performance. Given its high valuation at present, it is better to hold positions in the stock.
To Sum Up
Improving demand from customers in Florida and Energy Resources’ ability to efficiently meet rising commercial and industrial customer demand are expected to drive the performance of NextEra Energy.
Given the improvement in earnings estimates, it will be wise to remain invested in this utility at this moment.