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NextEra (NEE) to Extend View Through 2023, Split Stocks

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NextEra Energy (NEE - Free Report) announced that it is increasing financial expectations for 2021 and 2022, and extending long-term growth outlook through 2023, courtesy of persistent renewable asset additions to the generation portfolio and execution across all the businesses segments.

For 2021, NextEra is increasing its financial expectations ranges by 20 cents and now expects adjusted earnings per share within $9.60-$10.15. For 2022 and 2023, it expects to grow 6-8%, off the expected increased 2021 adjusted earnings per share. Earlier, the company expected 2022 adjusted earnings per share in the range of $10-$10.75, indicating 6-8% growth from 2021 EPS.

Factors Assisting NextEra

Amid the unprecedented economic crisis caused by the outbreak of COVID-19, NextEra continued to perform efficiently due to its wide customer base and strong asset base.

In addition, NextEra has well-chalked plans to invest in the range of $50-$55 billion in different projects that are extended from the last year through 2022. These investments will be directed to modernize and strengthen the company’s existing infrastructure, thereby enabling it to serve the expanding customer base more effectively. These investments will also be helping the company to produce more electricity from clean sources and lower carbon emissions from the production process.

The regulated investment will help it generate adequate cash flow, which will in turn be utilized to strengthen the existing operations and increase shareholders’ value.

Stock Split

NextEra’s board of directors has approved a four-for-one split of its common stock, with an intention of making the stock ownership more accessible to a broader base of investors. Per the approval, the company’s existing shareholders will receive three additional shares of common stock for each then-held share, to be distributed on Oct 19, 2020, and the additional shares will be distributed to shareholders as of Oct 26, 2020.

As a result of the four-for-one stock split, NextEra is updating adjusted earnings per share financial expectation ranges to reflect the increase in outstanding shares for the 2020-2023 time period. Taking into consideration the impact of the stock split, earnings per share for 2020, 2021, 2022 and 2023 are expected in the range of $2.18-$2.30, $2.40-$2.54, $2.55-$2.75, and $2.77-$2.97, respectively.

Currently, the stock is trading at more than $280 per share. If the shares continue to remain in this range, the stock split price will be $70 per share, making its shares accessible to wider investors. This will also increase the shares’ trading volume.

Price Performance

Year to date, shares of NextEra have outperformed the industry and S&P 500.

Zacks Rank & Stocks to Consider

NextEra currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same sector include Essential Utilities Inc. (WTRG - Free Report) , Otter Tail Corporation (OTTR - Free Report) and Chesapeake Utilities Corporation (CPK - Free Report) , each currently having a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Essential Utilities delivered an average surprise of 9.7% in last four quarters and its long-term (three to five years) earnings growth is projected at 6.01%.

Otter Tail and Chesapeake Utilities delivered an average surprise of 3.9% and 3.5%, respectively, in the last four quarters. The Zacks Consensus Estimate for Otter Tail and Chesapeake Utilities’ earnings has moved up 4.7% and 1.7%, respectively, in the past 60 days.

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