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Why Is NextEra Energy Partners (NEP) Up 1.7% 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 1.7% 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 Q1 Loss Widens Y/Y, Revenues Rise

NextEra Energy Partners, LP incurred a loss of $3.39 per unit in the first-quarter of 2020 against the Zacks Consensus Estimate of earnings of 28 cents. In the year-ago quarter, the partnership incurred a loss of 38 cents.

Revenues

In the quarter under review, the firm generated revenues worth $212 million that missed the Zacks Consensus Estimate of $266 million by 20.3%. However, the top line improved 19.8% on a year-over-year basis.

Highlights of the Release

In the quarter under review, NextEra Energy Partners’ total adjusted operating expenses were $163 million, up 13.9% from the year-ago quarter’s figure of $143 million.

In the quarter under review, the partnership’s operating income amounted to $49 million, up 44.1% from $34 million in the year-ago quarter.

The partnership now expects to achieve long-term distribution growth objectives without any additional acquisition till 2022. Notably, it declared a quarterly distribution of 55.5 cents per unit payable on May 15, to the unitholders of record as of May 7. This makes the annualized distribution of $2.22 per common unit, up approximately 15% on an annualized basis compared with the first quarter of 2019.

The partnership announced that it is well positioned to continue to deliver on its objectives and its commitments as it currently expects no material, financial or operational impacts due to the COVID-19 pandemic.

Financial Condition

NextEra Energy Partners had cash and cash equivalents of $115 million as of Mar 31, 2020, compared with $128 million as of Dec 31, 2019.

Long-term debt was $4,179 million as of Mar 31, 2020 compared with $4,132 million as of Dec 31, 2019.

Net cash provided by operating activities at the end of the first quarter 2020 was $99 million, higher than $19 million at the end of the first quarter of 2019.

Guidance

For 2020, the firm reaffirmed the run rate for cash available for distribution (CAFD) in the range of $505-$585 million (excluding all contributions from the Desert Sunlight projects).

The partnership continues to expect 12-15% per year growth for limited partner distributions through 2024. It expects the annualized rate of fourth-quarter 2020 distribution in the range of $2.40-$2.46 per common unit.

How Have Estimates Been Moving Since Then?

Fresh estimates followed an upward path over the past two months. The consensus estimate has shifted 20.93% due to these changes.

VGM Scores

At this time, NextEra Energy Partners has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

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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