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NextEra (NEE) Down 5.1% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for NextEra Energy (NEE - Free Report) . Shares have lost about 5.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is NextEra due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

NextEra Energy Q1 Earnings Beat Estimates, Revenues Lag

NextEra Energy, Inc. reported first-quarter 2020 adjusted earnings of $2.38 per share, surpassing the Zacks Consensus Estimate of $2.21 by 7.7%. In addition, the reported earnings were up 8.2% from $2.20 per share in the prior-year quarter.

On a GAAP basis, the company recorded earnings of 86 cents per share, down 39% from $1.41 reported in the year-ago quarter.

Total Revenues

In the first quarter, NextEra Energy’s operating revenues were $4,613 million, lagging the Zacks Consensus Estimate of $4,687 million by 1.6%. The reported revenues were up 13.2% year over year.

Segment Results

Florida Power & Light Company (FPL): Revenues from the segment amounted to $2,540 million, down 2.9% from the prior-year figure of $2,618 million. The segment’s earnings came in at $1.31 per share, up 7.4% from $1.22 recorded in the prior-year quarter.

Gulf Power Company (Gulf Power): Total segment revenues amounted to $328 million, in line with the year-ago figure. This segment’s earnings per share totaled 8 cents in the reported quarter, in line with the year-ago level.

NextEra Energy Resources: Revenues from the segment amounted to $1,773 million, up 5.3% from the prior-year quarter. Quarterly earnings from the segment came in at $1.08 per share, up 61.2% from 67 cents in the year-ago quarter.

Corporate and Other: The segment’s operating loss in the reported quarter was 9 cents compared with a loss of 7 cents per share in the year-ago period.
 
Highlights of the Release

Despite the economic challenges posed by the outbreak of novel coronavirus, the company’s capital projects continue to progress per plans. FPL and Gulf Power have taken steps to help customers, and both the utilities have suspended electrical disconnections in Florida to ensure that customers have continued access to electricity regardless of their economic circumstances.

In the reported quarter, NextEra Energy’s total operating expenses were down 10.4% from the prior-year level to $2,632 million.

Interest expenses in the quarter were $1,311 million, up 83.6% from the year-ago period.

In the reported quarter, Florida Power & Light Company’s total average customer count was up 72,000 on a year-over-year basis.

NextEra Energy Resources expanded the contracted renewables backlog by adding 1,600 MW of renewable projects during the first quarter.

Financial Update

NextEra Energy had cash and cash equivalents of $3,335 million as of Mar 31, 2020 compared with $600 million on Dec 31, 2019.

Long-term debt as of Mar 31, 2020 was $41.11 billion, up from $37.54 billion on Dec 31, 2019.

Cash flow from operating activities in first-quarter 2020 was $1.89 billion compared with $1.59 billion in the prior-year period.

Guidance
 
NextEra Energy reiterated its long-term earnings growth guidance. The company’s earnings are expected to grow at a compound annual rate of 6-8% per year through 2021, off its base of $7.70 in 2018. The company expects contributions from Florida acquisitions to boost earnings by 15 cents in 2020 and 20 cents in 2021.

NextEra Energy expects 2022 adjusted earnings per share in the range of $10-$10.75, indicating 6-8% growth from 2021 EPS.

The firm currently aims to add 11,500-18,500 MW of renewable power projects to its portfolio within the 2019-2022 time frame.

How Have Estimates Been Moving Since Then?

Estimates review followed a flat path over the past two months.

VGM Scores

Currently, NextEra has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, 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 has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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