Why Is NextEra Energy (NEE) Up 4.9% Since the Last Earnings Report?
A month has gone by since the last earnings report for NextEra Energy, Inc. NEE. Shares have added about 4.9% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is its due for a pullback? Before we dive into how investors and analysts have reacted 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 Beats Q1 Earnings, Revenue Estimates
NextEra Energy, Inc. reported first-quarter 2017 adjusted earnings of $1.75 per share, beating the Zacks Consensus Estimate of $1.56 by 12.2%. Reported earnings were also up by 10.1% year over year.
The year over year growth in earnings was primarily due to solid contribution from both Florida Power & Light Company and NextEra Energy Resources segments.
On a GAAP basis, NextEra Energy recorded first-quarter earnings of $3.37 per share, up from $1.41 a year ago. The variance between GAAP and adjusted earnings was primarily due to gain of $2.33 from the sale of fiber optic telecommunication business and $0.37 from hedges. The gains were offset by one time charges like merger related expenses of $0.07, operating loss in Spain solar projects of $0.02 and income tax expenses of $0.99.
Total Revenue
In the first quarter, NextEra Energy’s operating revenues were $3,972 million, surpassing the Zacks Consensus Estimate of $3,943 million by nearly 0.7%. Reported revenues also improved 3.6% from $3,835 million a year ago.
Segmental Results
Florida Power & Light Company (FPL): Earnings came in at $0.95 per share, up 11.8% from the prior-year quarter figure. Revenues amounted to $2,527 million, up 9.7% from $2,303 in the prior-year quarter.
NextEra Energy Resources (NEER): Quarterly earnings came in at $0.76 per share, up from $0.66 in the year-ago quarter. Revenues dropped 1.2% to $1,424 million.
Corporate and Other: Quarterly earnings were $0.04 compared with year ago earnings of $0.08. Revenues in the reported quarter came in at $21 million, down 76.9%.
Operational Update
In the reported quarter, NextEra Energy’s total operating expenses were down 39.8% to $1,567 million primarily due to lower fuel, purchased power and interchange.
Operating income rose 94.9% to $2,405 million from $1,234 million a year ago.
Interest expenses in the reported quarter was $360 million compared with $509 million in the year ago quarter.
In the reported quarter, average price of electricity went up by 5.4% year over year and total average customer count went up by 1.3% year over year.
Financial Update
NextEra Energy had cash and cash equivalents of $600 million as of Mar 31, 2017, compared with $1,292 million as of Dec 31, 2016.
Long-term debt as of Mar 31, 2017 was $28.5 billion, up from $27.8 billion as of Dec 31, 2016.
NextEra Energy’s cash flow from operating activities in the first quarter of 2017 was $1,364 million, compared with $1,545 million in the year-ago period.
Guidance
NextEra Energy reiterated its adjusted earnings guidance in the range of $6.35–$6.85 for 2017 and $6.80–$7.30 for 2018. The company expects earnings to grow at a compound annual rate of 6% to 8% per year through 2020, off a 2016 base.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter.
NextEra Energy, Inc. Price and Consensus
NextEra Energy, Inc. Price and Consensus | NextEra Energy, Inc. Quote
VGM Scores
At this time, NextEra Energy's stock has a nice Growth Score of 'B', though it is lagging a bit on the momentum front with a 'C'. Following the exact same course, the stock was allocated also 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 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for growth investors than those looking for value and momentum.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Click for Free NextEra Energy, Inc. (NEE) Stock Analysis Report >>
To read this article on Zacks.com click here.
Zacks Investment Research
