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Why Is NextEra Energy Partners (NEP) Up 2.5% 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 2.5% 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 Top, Revenues Miss

NextEra Energy Partners, LP delivered third-quarter 2018 earnings of 58 cents per unit, surpassing the Zacks Consensus Estimate of 45 cents by 28.9%. The bottom line was also significantly better than the year-ago quarter’s tally of 1 cent.

Revenues

In the quarter under review, NextEra Energy Partners revenues came in at $178 million, missing the Zacks Consensus Estimate of $283 million by 37.1%. Moreover, the top line was down 6.8% on a year-over-year basis. The top line was down year over year on account of lower renewable energy sales.

Quarterly Highlights

In the reported quarter, NextEra Energy Partners’ total adjusted operating expenses were $119 million, down 2.5% year over year.

Recently, NextEra Energy Partners entered into an agreement to buy a portfolio of 11 wind and solar projects from a subsidiary of NextEra Energy Resources, LLC. The total portfolio comprises 1,388 megawatt of wind and solar assets and has cash available for distribution (CAFD) weighted remaining contract life of nearly 18 years. The acquisition is expected to close by fourth-quarter, 2018.

Also, NextEra Energy Partners has announced to expand the pipeline compression capacity on the Texas pipelines by executing a long-term contract with an estimated investment of $115 million.

Financial Condition

NextEra Energy Partners had cash and cash equivalents of $76 million as of Sep 30, 2018 compared with $154 million as of Dec 31, 2017.

Long-term debt was $3,491 million as of Sep 30, 2018 compared with $4,218 million as of Dec 31, 2017.

Net cash from operating activities at the end of nine months in 2018 was $269 million, lower than $293 million in the year-ago period.

During the nine-month period of 2018, the firm’s total capital expenditure was $10 million compared with $342 million invested in the prior-year period.

Guidance

NextEra Energy Partners continues to expect adjusted EBITDA of $1-$1.15 billion for 2018 and cash available for distribution (CAFD) in the range of $360-$400 million.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted 5.65% due to these changes.

VGM Scores

At this time, NextEra Energy Partners has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision 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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