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NextEra (NEE) Aims for Zero Emission, Raises 2022-25 EPS View

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NextEra Energy (NEE - Free Report) announced plans to achieve Real Zero Emission by 2045. Management also increased adjusted earnings per share expectations for the 2022-2025 time period. 

Raised EPS Guidance

Courtesy of the ongoing stable performance and expectations of solid results in the future, NextEra Energy’s management decided to hike earnings expectations for the 2022-2025 time period. Management increased adjusted earnings per share expectations by 5 cents for both the years, i.e. 2022 and 2023, and by 10 cents for 2024. NextEra expects 2025 earnings per share to grow in the 6% to 8% range from the updated adjusted 2024 earnings range.

Post the revision in earnings per share expectations, the new guided ranges are $2.80-$2.90, $2.98-$3.13, $3.23-$3.43 and $3.45-$3.70 per share for 2022, 2023, 2024 and 2025, respectively.

Path to Zero-Emission

To achieve the Real Zero Goal, NextEra will take steps to decarbonize its own business, make investments in wind, solar, battery storage, green hydrogen and other renewable energy development. It will also work to become the preferred partner for customers to assist them in reducing or eliminating carbon emissions in their own operations.

NextEra Energy has been working continuously to cut down emission from its production process and this new plan is a continuation of NEE’s old objective of emission reduction. The Real Zero plan sets emission reduction goal from 2005 baseline. NextEra Energy aims to cut 70% emission by 2025, increasing the emissions reduction rate to 82% by 2030, 87% by 2035 and 94% by 2040 before achieving  Real Zero by no later than 2045.

NextEra Energy will achieve its emission target by adding significant volume of solar and wind assets in its generation portfolio.  NextEra has plans to produce significant volume of clean electricity from renewable natural gas. It also plans to convert natural gas units to run on green hydrogen in order to reduce emission. NEE will also make investment in battery storage projects that will support its renewable projects.

Transition in the Utility Space

In the United States utility space, the focus of the operators has changed. Their primary objectives are to generate more electricity from clean sources and increase reliability of infrastructure to supply electricity, even during adverse weather conditions. NextEra Energy has been making significant capital expenditure to strengthen its infrastructure.

Per the U.S. Energy Information Administration (“EIA”), the annual share of U.S. electricity generation from renewable energy sources will rise from 20% in 2021 to 22% in 2022 and 24% in 2023, as a result of the continuous addition of solar and wind-generating capacity.

A few utilities have already decided to reduce carbon emission and achieve carbon neutrality over the next few decades.  Utilities like Xcel Energy (XEL - Free Report) , Alliant Energy (LNT - Free Report) and Duke Energy (DUK - Free Report) among others have already announced plans to achieve carbon neutrality. These utilities have made significant capital investment plans to add more new renewable energy units in their portfolio and shut down old polluting power plants.

The Zacks Consensus Estimate for 2022 earnings per share of Xcel Energy, Alliant Energy and Duke Energy implies year-over-year growth of 6.8%, 4.4% and 4.6% respectively.

Price Performance

In the past month, NextEra Energy shares have risen 2% against the industry’s 8.1% decline.

 

Zacks Investment Research
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Zacks Rank

NextEra Energy currently has Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

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