Why is NextEra (NEE) up 14.7% since its last earnings report?

It has been about a month since NextEra Energy (NEE) last reported earnings. Shares have risen about 14.7% in that time, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is NextEra headed for a recession? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the company’s most recent earnings report in order to better understand the important catalysts.

NextEra Energy First Quarter Earnings Beat Estimates, Sales Delay

NextEra Energy, Inc. reported first-quarter 2024 adjusted earnings of 91 cents per share, up 13.8% to beat the Zacks Consensus Estimate of 80 cents. The financial result also increased by almost 8.3% year-on-year. The increase was driven by solid results from FPL and NextEra Energy Resources.

First quarter GAAP earnings per share were $1.10 compared to $1.04 in the year-ago period.

Total revenues

For the first quarter, NextEra’s operating revenues were $5.73 billion, missing the Zacks Consensus Estimate of $6.46 billion by 11.4%. On an annual basis, sales revenues decreased by 14.7%.

Segment results

Florida Power & Light Company (“FPL”): Segment revenues were nearly $3.8 billion, down 2.2% from the prior-year period of $3.92 billion. Earnings per share were 57 cents, compared with 53 cents reported a year ago.

NextEra Energy Resources: Its revenue was $1.86 billion, down 33.2% from the prior year of $2.79 billion. Segment earnings were 40 cents per share, compared with 36 cents in the year-ago quarter.

Corporate and others: Operating revenues for the reported quarter were $33 million. First-quarter operating loss was 6 cents per share, up from a year-ago loss of 5 cents.

Release highlights

Thanks to continued economic improvement in Florida, the average number of FPL customers in the first quarter of 2024 increased by almost 100,000 compared to the prior year period. FPL brought nearly 1,640 megawatts (MW) of new, cost-effective solar projects into service during the quarter.

NextEra Energy Resources expanded its contracted portfolio of renewable energy projects, adding 2,765 MW of renewable projects during the quarter. The additional backlog includes nearly 145 MW of wind projects, 1,545 MW of solar projects, 1,025 MW of battery storage projects and 50 MW of wind farms. The company’s renewable energy backlog currently stands at nearly 21.5 gigawatts.

Financial update

As of March 31, 2024, NEE had cash and cash equivalents of almost $1.6 billion, compared to $2.7 billion as of December 31, 2023.

Long-term debt was $65.9 billion as of March 31, 2024, compared to $61.4 billion as of December 31, 2023.

First-quarter 2024 operating cash flow was $3 billion, compared to $1.7 billion in the prior-year quarter.

The story continues

Conductivity

NextEra Energy confirmed fiscal 2024 earnings in the range of $3.23-$3.43 per share. The midpoint of the guided range is $3.33 per share, which is lower than the Zacks Consensus Estimate of $3.4.

In 2025, the company expects earnings per share of $3.45-3.70. NextEra Energy expects earnings per share to grow 6% to 8% annually through 2026, based on 2024 adjusted earnings per share. This translates to earnings per share of $3.63 to $4.00 in 2026

The company’s unit, Energy Resources, currently aims to add 32,700-41,800 MW of renewable energy projects to its portfolio between 2023 and 2026.

How have estimates changed since then?

Over the last month, investors have seen a downward trend in estimate revisions.

VGM results

Right now, NextEra has a solid Growth Score of B, although it lags slightly behind its Momentum Score of C. Plotting a somewhat similar path, the stock is given a D on the value side, placing it in the bottom 40% for this investment strategy.

Overall, the stock has a Total VGM Score of C. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for this company generally show a downward trend, and the scale of this correction indicates a downward shift. No wonder NextEra has a Zacks Rank #4 (Sell). We expect a below-average rate of return on stocks in the coming months.

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