NextEra Energy Partners (NEP) Up 16.6% Since Last Earnings Report: Can This Continue?

It has been about a month since NextEra Energy Partners (NEP) last reported earnings. Shares have risen about 16.6% in that time, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is NextEra Energy Partners headed for a decline? Before we dive into the recent reaction from investors and analysts, let’s take a quick look at the company’s most recent earnings report in order to get a better handle on the important factors influencing the situation.

NextEra Energy Partners’ first-quarter earnings beat estimates

NextEra Energy Partners, LP reported first-quarter 2024 operating earnings of 75 cents per unit, surpassing the Zacks Consensus Estimate of 12 cents by 525%. In the year-ago quarter, the company reported a loss of 17 cents per unit.

Revenue

The company’s operating revenues of $257 million missed the Zacks Consensus Estimate of $346 million. However, this number increased by 4.9% from the $245 million recorded in the previous year.

Release highlights

Total operating expenses were $278 million, down 0.7% from $280 million in the same quarter last year. This was driven by lower operating and maintenance costs of $123 million, down 15.8% from the prior quarter’s $146 million.

The company reported an operating loss of $21 million, compared to a loss of $35 million recorded in the same period in 2023.

Financial condition

As of March 31, 2024, the company had cash and cash equivalents of $245 million, compared to $274 million as of December 31, 2023.

Long-term debt was $4.942 billion as of March 31, 2024, compared to $4.941 billion as of December 31, 2023.

Net cash from operating activities for the first three months of 2024 was $78 million, compared to $82 million in the year-ago period.

Distribution update

NEP declared a quarterly distribution to unitholders of 89.25 cents per common unit at an annual rate of $3.57. This declaration reflects an annualized increase of 6% compared to the fourth quarter 2023 distribution per common unit. It will be paid on May 15, 2024 to unit holders as of May 7, 2024.

Conductivity

NextEra Energy Partners expects 2024 adjusted EBITDA to be in the range of $1.9 billion to $2.1 billion. It also projects the CAFD to be valued at $730 million to $820 million.

The company continues to anticipate 5-8% annual growth in limited partner distributions per unit, with the current target of 6% annually, which is a reasonable range of expectations through at least 2026.

How have estimates changed since then?

It turns out that the estimates have not changed in the last month.

As a result of these changes, the consensus estimate moved by 31.96%.

VGM results

Right now, NextEra Energy Partners has an average Growth Score of C, but its Momentum Score is doing much better with an A. Plotting a somewhat similar path, the stock is rated a B on the value side, putting it in the second quintile for this investment strategy.

Overall, the company’s Total VGM Score is A. If you’re not focused on one strategy, this score should interest you.

Perspectives

NextEra Energy Partners carries a Zacks Rank #2 (Buy). We expect an above-average rate of return on shares in the coming months.

Want the latest recommendations from Zacks Investment Research? Today you can download the top 7 stocks for the next 30 days. Click to get this free report

NextEra Energy Partners, LP (NEP): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research