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Why Is NextEra Energy (NEE) Up 3.7% Since the Last Earnings Report?

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About a month has gone by since the last earnings report for NextEra Energy, Inc. (NEE - Free Report) . Shares have added about 3.7% 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 drivers.

NextEra Energy Beats on Q2 Earnings, Keeps '17 View

NextEra Energy reported second-quarter 2017 adjusted earnings of $1.86 per share, beating the Zacks Consensus Estimate of $1.76 by 5.7%. Reported earnings were also up by 11.4% year over year.

The year-over-year growth in earnings was primarily due to solid contribution from both Florida Power & Light Company and NextEra Energy Resources segments.

On a GAAP basis, NextEra Energy recorded second-quarter earnings of $1.68 per share, up from $1.16 a year ago. The variance between GAAP and adjusted earnings was primarily due to loss of 32 cents from non-qualifying hedges and merger related expenses of 1 cent. The loss was offset by a one-time gain of 14 cents from income tax expenses and income of 1 cent from Spanish solar projects.

Total Revenue

In the second quarter, NextEra Energy’s operating revenues were $4,404 million, surpassing the Zacks Consensus Estimate of $4,353 million by nearly 1.2%. Reported revenues also improved 15.4% from $3,817 million a year ago.

Segmental Results

Florida Power & Light Company (FPL): Earnings came in at $1.12 per share, up 16.7% from the prior-year quarter figure. Revenues amounted to $3,091 million, up 12.4% from $2,750 in the prior-year quarter.

NextEra Energy Resources (NEER): Quarterly earnings came in at 74 cents per share, up from 67 cents in the year-ago quarter. Revenues improved 33.5% to $1,295 million.

Corporate and Other: Quarterly earnings were breakeven compared with the year-ago earnings of 4 cents per share. Revenues in the reported quarter came in at $18 million, down 81.4%.

Operational Update

In the reported quarter, NextEra Energy’s total operating expenses were up 17.8% to $3,119 million, primarily due to higher fuel, purchased power and interchange.

Operating income rose 9.9% to $1,285 million from $1,169 million a year ago.

Interest expenses in the reported quarter were $430 million compared with $602 million in the year-ago quarter.

In the reported quarter, Florida Power & Light Company’s average price of electricity went up 10.6% year over year and total average customer count went up 1.3% year over year.

Financial Update

NextEra Energy had cash and cash equivalents of $642 million as of Jun 30, 2017 compared with $1,292 million as of Dec 31, 2016.

Long-term debt as of Jun 30, 2017 was $30.4 billion, up from $27.8 billion as of Dec 31, 2016.

NextEra Energy’s cash flow from operating activities in the first half of 2017 was $3,165 million compared with $3,270 million in the year-ago period.

Guidance

NextEra Energy reiterated 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 rate of 6–8% per year through 2020, off a 2016 base.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the past month as none of them issued any earnings estimate revisions.

NextEra Energy, Inc. Price and Consensus

 

VGM Scores

At this time, the stock has a subpar Growth Score of D, however its Momentum is doing a lot better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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.

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

Outlook

The stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.




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