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NextEra Energy (NEE) Rides on Investments, Customer Growth

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Recently, we issued an updated research report on NextEra Energy (NEE - Free Report) . This utility is poised to gain from well chalked-out capital investment plan and strong economic conditions in its service territories, in turn boosting customer count.

What’s Driving the Stock?

NextEra Energy is poised to gain from positive economic fundamentals in its service territories, which will help it achieve the targeted compound annual earnings growth rate of 6-8% through 2021. Improving economy also exerted a positive impact on customer growth of the company. Its subsidiary, Florida Power & Light Company, continues to increase the number of customer accounts, having already added 58,000 more customers in the third quarter than the year-ago period.

NextEra Energy has plans to invest nearly $40.0-$44.0 billion in different projects over the 2017-2020 period. These investments will be directed to modernize and strengthen the existing infrastructure of the company, enabling it to serve its expanding customer base more effectively.

The company continues to work on its strategy of making a long-term investment in clean energy assets. In line with the strategy, the company announced plans to add nearly 10,100-16,500 MW of alternate power generation assets across the United States over the 2017-2020 time frame. The renewable initiatives will allow NextEra Energy to lower carbon emission levels by more than 65% within 2021 from 2001 base.

The company is also investing in natural gas pipeline operations. In addition, the acquisition of Gulf Power, Florida City Gas and ownership stakes in two natural gas power plants from Southern Company will expand regulated natural gas operation of NextEra Energy and prove accretive to its earnings over the long term.

However, the company’s nature of business is subject to complex and comprehensive federal, state and other regulations. Substantial investments are undertaken to ensure the safety of nuclear operations. That said, the risk of unplanned outages remains, which could derail its normal operations and impact profitability.

Price Movement

Shares of NextEra Energy have gained 14.9% in the past 12 months against its industry’s decline of 4.9%.



Zacks Rank & Key Picks

NextEra Energy currently has a Zacks Rank #3 (Hold). Some better-ranked stocks from the same industry are American Electric Power Company (AEP - Free Report) , Ameren Corporation (AEE - Free Report) and Pinnacle West Capital Corporation (PNW - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

American Electric Power, Ameren and Pinnacle West Capital surpassed third-quarter earnings estimates by 1.63%, 17.19% and 1.82%, respectively.

The Zacks Consensus Estimate for 2018 earnings of American Electric Power, Ameren and Pinnacle West Capital has  moved1%, 3.1% and 0.5%, respectively, over the past 30 days.

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