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Buy This Clean Energy Stock Before Earnings for Long-Term Growth?
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NextEra Energy (NEE - Free Report) is both the country’s biggest electric utility and a leader in renewables. This seemingly futuristic stock also pays a solid dividend and it’s been far more stable than many other clean energy names.
NextEra is scheduled to release its third quarter financial results on Wednesday, October 13. And a recent pullback might provide a solid entry point for investors with long-term horizons.
NextEra Basics
NextEra owns the largest rate-regulated electric utility in the country, Florida Power & Light Company, serving nearly 6 million customer accounts. The company through various subsidiaries generates clean, emissions-free electricity from seven commercial nuclear power units. NEE is also one of the world's largest generators of renewable energy from wind and solar, and it’s a global leader in battery storage.
NextEra and its various subsidiaries slowly grew into the largest renewable energy company through strategic planning, including using tax subsidies to help finance wind and solar projects around the U.S., while trying to avoid debt. It also sells output to other utilities because many must get at least some of their power from green sources to meet different government mandates.
In 2019, NEE began its efforts to install more than 30 million solar panels by 2030 to help make Florida a world leader in the production of solar energy. The firm surpassed 40% of that goal last quarter. Plus, renewable’s share of U.S. electricity generation is projected to surge from 20% last year to 42% by 2050, based on U.S. Energy Information Administration data, with wind and solar set to be the biggest gainers.
Image Source: Zacks Investment Research
Other Fundamentals
NEE revenue is set to climb 5% in 2021, based on Zacks estimates, to help its adjusted earnings pop 9% to $2.52 a share. The energy giant’s sales are then projected to jump 21% to $22.68 billion to soar above its pre-COVID levels ($19.2 billion). Meanwhile, its adjusted earnings are expected to pop another 9% in FY22. NextEra has also consistently topped our bottom-line estimates.
NextEra stock has crushed the broader utilities sector over the past decade (up 485%) and the last five years (up 160%), which is hardly a shock. The stock has cooled off a bit, but it’s still climbed 90% in the past three years to outpace the S&P 500’s 60%.
NEE shares hit records shortly after Biden’s inauguration in late January. It has gone on a bit of a rollercoaster ride since then, with it currently trading around 9% below its records at roughly $80 a share. The stock recently climbed out of oversold RSI (30 or under) levels and it’s attempting to climb back above its 50-day moving average.
Bottom Line
NEE shares are up only 7% in the last 12 months to lag the market’s 26% climb, which could mean it’s ready to break out of its slump, especially if it’s able to impress Wall Street. And NextEra is trading at a discount to its year-long median at 29X forward earnings.
On top of that, NextEra’s 1.92% dividend yield tops the S&P 500’s 1.30% and easily beats the 10-year U.S. Treasury. Meanwhile, four of the seven brokerage recommendations Zacks has are “Strong Buys,” with the others at “Holds.” All that said, now might be a good time to buy this well-diversified clean energy stock, though some might want to wait for its report.
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Buy This Clean Energy Stock Before Earnings for Long-Term Growth?
NextEra Energy (NEE - Free Report) is both the country’s biggest electric utility and a leader in renewables. This seemingly futuristic stock also pays a solid dividend and it’s been far more stable than many other clean energy names.
NextEra is scheduled to release its third quarter financial results on Wednesday, October 13. And a recent pullback might provide a solid entry point for investors with long-term horizons.
NextEra Basics
NextEra owns the largest rate-regulated electric utility in the country, Florida Power & Light Company, serving nearly 6 million customer accounts. The company through various subsidiaries generates clean, emissions-free electricity from seven commercial nuclear power units. NEE is also one of the world's largest generators of renewable energy from wind and solar, and it’s a global leader in battery storage.
NextEra and its various subsidiaries slowly grew into the largest renewable energy company through strategic planning, including using tax subsidies to help finance wind and solar projects around the U.S., while trying to avoid debt. It also sells output to other utilities because many must get at least some of their power from green sources to meet different government mandates.
In 2019, NEE began its efforts to install more than 30 million solar panels by 2030 to help make Florida a world leader in the production of solar energy. The firm surpassed 40% of that goal last quarter. Plus, renewable’s share of U.S. electricity generation is projected to surge from 20% last year to 42% by 2050, based on U.S. Energy Information Administration data, with wind and solar set to be the biggest gainers.
Other Fundamentals
NEE revenue is set to climb 5% in 2021, based on Zacks estimates, to help its adjusted earnings pop 9% to $2.52 a share. The energy giant’s sales are then projected to jump 21% to $22.68 billion to soar above its pre-COVID levels ($19.2 billion). Meanwhile, its adjusted earnings are expected to pop another 9% in FY22. NextEra has also consistently topped our bottom-line estimates.
NextEra stock has crushed the broader utilities sector over the past decade (up 485%) and the last five years (up 160%), which is hardly a shock. The stock has cooled off a bit, but it’s still climbed 90% in the past three years to outpace the S&P 500’s 60%.
NEE shares hit records shortly after Biden’s inauguration in late January. It has gone on a bit of a rollercoaster ride since then, with it currently trading around 9% below its records at roughly $80 a share. The stock recently climbed out of oversold RSI (30 or under) levels and it’s attempting to climb back above its 50-day moving average.
Bottom Line
NEE shares are up only 7% in the last 12 months to lag the market’s 26% climb, which could mean it’s ready to break out of its slump, especially if it’s able to impress Wall Street. And NextEra is trading at a discount to its year-long median at 29X forward earnings.
On top of that, NextEra’s 1.92% dividend yield tops the S&P 500’s 1.30% and easily beats the 10-year U.S. Treasury. Meanwhile, four of the seven brokerage recommendations Zacks has are “Strong Buys,” with the others at “Holds.” All that said, now might be a good time to buy this well-diversified clean energy stock, though some might want to wait for its report.