NextEra Energy Partners (NEP) Up 0.5% Since Last Earnings Report: Will It Continue?

It’s been a month since NextEra Energy Partners’ (NEP) last reported earnings. Shares are up about 0.5% in that time, underperforming the S&P 500.

Will the recent positive trend continue into its next earnings release, or is NextEra Energy Partners headed for a pullback? Before we dive into how investors and analysts have reacted recently, let’s take a quick look at the latest earnings report to better understand the important drivers.

NextEra Energy Partners posts third-quarter loss, higher revenue

NextEra Energy Partners, LP reported a loss of $1.21 per unit in the third quarter of 2019, compared with the Zacks Consensus Estimate of earnings of 62 cents. In the same quarter a year earlier, the partnership posted earnings of 58 cents.

Revenues

During the quarter, the partnership generated revenues of $253 million, missing the Zacks Consensus Estimate of $355 million by 28.7%. However, the top line increased by 42.1% year-over-year. The increase was attributable to higher sales in the Renewable Energy Sales segment.

Quarterly highlights

NextEra Energy Partners’ total adjusted operating expenses were $165 million in the quarter, compared to $119 million in the same quarter a year earlier.

The partnership increased dividends by almost 15% year-over-year.

During the quarter, the partnership announced a definitive agreement to acquire Meade Pipeline Co LLC.

The partnership incurred interest expense of $372 million compared to income of $31 million in the year-ago quarter. In connection with the acquisition of outstanding notes of the Genesis operating company, the partnership issued $500 million of seven-year senior unsecured notes at 3.875% in September.

Financial condition

As of September 30, 2019, NextEra Energy Partners had cash and cash equivalents of $195 million compared to $147 million at December 31, 2018.

Long-term debt as of September 30, 2019 amounted to USD 3,719 million, while as of December 31, 2018 it amounted to USD 2,728 million.

At the end of the first nine months of 2019, net cash flow from operating activities amounted to USD 252 million and was lower than USD 269 million in the same period of the previous year.

Conductivity

NextEra Energy Partners continues to expect 12-15% annual growth in limited partner distributions through 2024. Excluding all contributions from the Desert Sunlight 250 and 300 projects, NextEra Energy Partners expects CAFD in the range of $505-585 million. The partnership expects adjusted EBITDA in the range of $1.225-1.4 billion in 2019.

How have estimates changed since then?

Over the past month, investors have witnessed a downward trend in new estimates. The consensus estimate has shifted -8.13% due to these changes.

VGM Results

At the moment, NextEra Energy Partners has a weak Growth Score of F, a grade with the same rating on the momentum front. However, the stock has been given a grade of C on the value side, which puts it in the middle 20% for this investment strategy.

Overall, the stock has a Composite VGM Score of F. If you’re not focused on a single strategy, this rating should interest you.

Perspectives

Estimates for the stock are trending lower, and the magnitude of this revision indicates a downward shift. Interestingly, NextEra Energy Partners has a Zacks Rank #3 (Hold). We expect the stock to deliver consistent returns over the next few months.

Want the latest recommendations from Zacks Investment Research? Today you can download the 7 best 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.