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NextEra Energy Partners (NEP) Up 0.5% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for NextEra Energy Partners (NEP - Free Report) . Shares have added about 0.5% in that time frame, underperforming 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 Posts Loss in Q3, Higher Revenues

NextEra Energy Partners, LP incurred third-quarter 2019 loss of $1.21 per unit, against the Zacks Consensus Estimate of earnings of 62 cents. In the year-ago quarter, the partnership delivered earnings of 58 cents.

Revenues

In the quarter under review, the partnership generated revenues worth $253 million that missed the Zacks Consensus Estimate of $355 million by 28.7%. However, the top line increased 42.1% on a year-over-year basis. The upside can be attributed to higher sales in the Renewable energy sales segment.

Quarterly Highlights

In the quarter, NextEra Energy Partners’ total adjusted operating expenses were $165 million compared with the year-ago quarter’s figure of $119 million.

The partnership raised distributions by nearly 15% on a year-over-year basis.

In the said quarter, the partnership announced a definitive agreement to acquire Meade Pipeline Co LLC.

The partnership incurred interest expenses of $372 million against an income of $31 million in the year-ago quarter. In relation to acquisition of the outstanding Genesis operating company notes, the partnership issued $500 million of seven-year senior unsecured notes at a yield of 3.875% in September.

Financial Condition

NextEra Energy Partners had cash and cash equivalents of $195 million as of Sep 30, 2019 compared with $147 million as of Dec 31, 2018.

Long-term debt was $3,719 million as of Sep 30, 2019 compared with $2,728 million as of Dec 31, 2018.

Net cash provided by operating activities at the end of the first nine months of 2019 was $252 million, lower than $269 million in the year-ago period.

Guidance

NextEra Energy Partners continues to expect 12-15% annual growth in limited partner distributions through 2024. Excluding all contributions from the Desert Sunlight 250 and 300 projects, NextEra Energy Partners expects CAFD in the range of $505-$585 million. The partnership expects adjusted EBITDA in the band of $1.225-$1.4 billion for 2019.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -8.13% due to these changes.

VGM Scores

At this time, NextEra Energy Partners has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. 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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