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Why Is NextEra Energy (NEE) Up 10.3% Since the Last Earnings Report?

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A month has gone by since the last earnings report for NextEra Energy, Inc. (NEE - Free Report) . Shares have added about 10.3% in in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

NextEra Energy Misses Q4 Earnings, Issues Outlook

NextEra Energy reported fourth-quarter 2016 adjusted earnings of $1.21 per share, missing the Zacks Consensus Estimate of $1.29 by 6.2%. Reported earnings were, however, up 3.4% year over year.

On a GAAP basis, NextEra Energy recorded fourth-quarter earnings of $2.06 per share,up from $1.10 a year ago. The variance between adjusted and GAAP earnings was primarily due to an unrealized mark-to-market gain of $1.00 from non-qualifying hedges, income tax-related expenses of $0.54, and gain on sale of natural gas generation facilities of $0.41.

NextEra Energy’s adjusted earnings for 2016 came in at $6.19, missing the Zacks Consensus Estimate of $6.22.However, earnings climbed 8.4% year over year courtesy of higher contributions from its subsidiaries, FPL and NEER.

On a GAAP basis, earnings for the full year were $6.25, up 3.1% from $6.06 in 2015.

Total Revenue

In the fourth quarter, NextEra Energy’s operating revenues were $3,699 million, lagging the Zacks Consensus Estimate of $4,156 million by nearly 11%. Reported revenues also decreased 9.1% from $4,069 million a year ago.

Revenues for the full year came in at $16,155 million, down 7.6% from $17,486 million in the year-ago period.

Segmental Results

Florida Power & Light Company (FPL): Earnings came in at $0.79 per share, same as the prior-year quarter figure. Revenues amounted to $2,558 million, down 9.9% from $2,839 in the prior-year quarter.

NextEra Energy Resources (NEER): Quarterly earnings came in at $0.41 per share, up from $0.40 in the year-ago quarter. Revenues dropped 6.8% to $1,052 million.

Corporate and Other: Quarterly earnings increased from the year-ago loss of $0.02 to earnings of a penny. Revenues in the reported quarter came in at $89 million, down 11.9%.

Operational Update

In the reported quarter, NextEra Energy’s total operating expenses were down 13.2% to $2,773 million primarily due to lower fuel, purchased power and interchange.

Operating income rose 5.7% to $926 million from $876 million a year ago.

Financial Update

NextEra Energy had cash and cash equivalents of $1,292 million as of Dec 31, 2016, compared with $571 million as of Dec 31, 2015.

Long-term debt as of Dec 31, 2016 was $27.8 billion, up from $26.7 billion as of Dec 31, 2015. NextEra Energy’s cash flow from operating activities in 2016 was $6,336 million, compared with $6,116 million in the year-ago period.

Guidance

NextEra Energy provided 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 growth 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 an upward trend in fresh estimate. There has been one revision higher for the current quarter In the past month, the consensus estimate has shifted by 5.77% due to these changes.

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 subpar score of 'D' on both growth and momentum front. Charting a somewhat similar path, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregte VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for value based on our styles scores.

Outlook

Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. It comes with little surprise that the stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.


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