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NextEra Energy Is Trading Above 200-Day SMA: How to Play the Stock?

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Key Takeaways

  • NEE is trading above its 200-day SMA, signaling bullish momentum supported by strong operational performance.
  • NEE plans over $74B in investments between 2025-2029 to expand clean and renewable energy capacity.
  • NEE's ROE of 12.42% beats the industry average and it targets 10% annual dividend growth through 2026.

NextEra Energy (NEE - Free Report) is trading above its 200-day simple moving average (“SMA”), signaling a bullish trend. NEE’s shares have gained steadily over the past 12 months after the earnings beat in the trailing four quarters.

The 200-day SMAs are a key indicator for traders and analysts to identify support and resistance levels. It is considered particularly important as this is the first marker of an uptrend or downtrend of the stocks.

NEE 200 Day SMA

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Image Source: Zacks Investment Research

The company benefits from the well-chalked-out investment plan to strengthen its operations, strategic acquisitions, expanding customer base, increasing backlog of clean projects and improve the economic condition in the service regions.

Another utility, The Southern Company (SO - Free Report) , has well chalked out capital investment plan to support clean power generation and grid modernization to support load growth.

Price performance of NextEra Energy was better than The Southern Company and the Zacks Utility- Electric Power industry in the last six months.

Price Performance (Six months)

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Should NextEra Energy be added to your portfolio purely on the back of price strength? Let’s delve deeper and find out the factors that can help investors decide whether it is a good entry point to add the NEE stock to their portfolio.

Factors Acting as Tailwinds for NextEra Energy

Nearly 89% of NextEra Energy’s customers are residential, with commercial and industrial users comprising the remaining 11%. The company’s significant scale, advanced technology and robust operational capabilities support consistent, above-average returns. Moreover, its wide operating presence and rapidly growing renewable energy portfolio further enhance NextEra Energy’s competitive position.

NextEra Energy’s subsidiary (FPL) plans to invest nearly $43 billion between 2025 and 2029 to strengthen system reliability and improve service quality. Over the longer term, the company aims to add more than 25 GW of new generation and storage capacity by 2034, backed by about $19.5 billion in clean energy investments over the same timeframe.

NextEra Energy is strengthening its long-term clean energy strategy through significant investments and a well-developed project pipeline. The company, through its other unit Energy Resources, aims to add 36.5-46.5 GW of new renewable capacity between 2024 and 2027 and plans to invest $31.3 billion from 2025 to 2029 to expand and enhance operations. With a sizable backlog of 29.6 GW in signed contracts, the company maintains strong visibility into growth.
 
Florida’s strengthening economic backdrop is supporting population growth and rising electricity demand, enabling NEE to grow its customer base. Meanwhile, FPL offers residential power rates that remain well below the national average, improving customer appeal and reinforcing the company’s competitive advantage.

NextEra Energy, a capital-intensive company with a domestic focus, stands to gain from the Federal Reserve's decision to cut interest rates. The Fed has reduced the benchmark rate by 25 basis points, lowering it from the 4.00-4.25% range to 3.75-4.00%. More rate cuts are anticipated in 2026, which could further reduce the company’s capital servicing costs.

NextEra Energy’s Earnings Estimates and Surprise History

The Zacks Consensus Estimate for NEE’s 2026 earnings per share indicates year-over-year growth of 8.25%.

NEE's Earnings Estimate

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Courtesy of the efficient execution of plans and smart capital investment, NextEra Energy’s earnings were able to surpass expectations in the last four reported quarters, resulting in an average surprise of 4.39%.

NEE's Earnings Surprise

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Another utility, Duke Energy Corporation (DUK - Free Report) , is also making smart capital investments to expand its clean energy generation assets and was able to surpass earnings estimates in the last four reported quarters. Duke Energy’s earnings surprise in the last four reported quarters is pegged at 5.72%.

NEE Stock Returns Better Than Its Industry

Return on equity (“ROE”) is a financial ratio that measures how well a company uses its shareholders’ equity to generate profits. The current ROE of the company indicates that it is using shareholders’ funds more efficiently than its peers.

NextEra Energy’s trailing 12-month ROE is 12.42%, ahead of the industry average of 10.3%. 

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Image Source: Zacks Investment Research

NextEra Energy’s Shares Trading at a Premium

The company is currently valued at a premium compared with its industry on a forward 12-month P/E basis. NextEra Energy is currently trading at 19.58X compared with the industry average of 15.12X.

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NextEra Energy Increases Shareholders Value

NextEra Energy plans to increase the dividend rate annually by 10%, at least through 2026, from the 2024 base, subject to its board’s approval. The current annual dividend of the company is $2.27 per share and the dividend yield of 2.89% is better than the Zacks S&P 500 composite’s 1.35%. NextEra Energy has increased its dividend five times in the last five years. Check NEE’s dividend history here.

The company also repurchases its shares at appropriate moments to enhance the value of its shareholders. The current buyback authorization will enable the company to buy back 180 million shares over an unspecified period.

Summing Up

NextEra Energy continues to deliver consistent performance, supported by increasing demand for clean energy across its service areas. The company is methodically expanding its clean energy portfolio to meet this rising demand, while Florida’s strong economic environment is generating additional growth opportunities for the utility.

NEE will benefit from the decline in interest rates and strong demand from its residential customer base. The improvement in earnings estimates and return on equity makes this Zacks Rank #2 (Buy) stock attractive. NextEra Energy is currently trading at a premium, a valuation supported by its robust business model. New investors may consider adding the stock to their portfolios for potential long-term returns. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 


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