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Why Is NextEra Energy Partners (NEP) Up 6.2% Since Last Earnings Report?

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It has been about a month since the last earnings report for NextEra Energy Partners (NEP - Free Report) . Shares have added about 6.2% in that time frame, outperforming the S&P 500.

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

NextEra Energy Partners Q3 Earnings & Revenues Miss

NextEra Energy Partners, LP reported earnings of 24 cents per unit for third-quarter 2021, lagging the Zacks Consensus Estimate of 64 cents by 62.5%. The figure also declined 68.4% from the year-ago earnings of 76 cents per unit.

Revenues

For the quarter under review, the firm’s revenues of $252 million missed the Zacks Consensus Estimate of $342 million by 26.4% but rose 5% from the year-ago figure of $240 million.

Highlights of the Release

In the September quarter, NextEra Energy Partners closed its previously announced acquisitions of nearly 400 megawatts (MW) of operating wind projects from a third party, and 590 net MW of geographically diverse wind and solar projects from NextEra Energy Resources.

The firm also announced an agreement to acquire nearly 100 MW of operating wind assets in California from a third party to further expand the renewable portfolio and enhance long-term growth visibility.

For the third quarter, the partnership’s operating income summed $64 million, down 5.9% from $68 million in the year-ago period.

Financial Condition

NextEra Energy Partners had cash and cash equivalents worth $133 million as of Sep 30, 2021 compared with $108 million on Dec 31, 2020.

Long-term debt was $3,961 million as of Sep 30, 2021 compared with $3,969 million on Dec 31, 2020.

Net cash provided by operating activities in the first nine months of 2021 was $492 million, higher than $482 million in the comparable period of last year.

Distribution Update

The firm announced a quarterly distribution of 68.5 cents per unit, payable on Nov 12 to unitholders of record as of Nov 4. This brings the annualized rate to $2.74 per unit, marking a 15% hike on an annualized basis from third-quarter 2020.

Guidance

For 2021, the firm reaffirmed its run rate for cash available for distribution guidance at the upper end of the previously projected $600-$680 million range. It also reinstated adjusted EBITDA expectation at the upper end of the previously anticipated band of $1.44-$1.62 billion.

From an annualized distribution rate of $2.46 per common unit in fourth-quarter 2020, the partnership expects 12-15% per year growth for limited partner distributions through 2024.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted -10.76% due to these changes.

VGM Scores

At this time, NextEra Energy Partners has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, 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 aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, NextEra Energy Partners has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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