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NextEra Energy's Promising Earnings Growth Outlook Underpins Dividend Growth Trajectory

Dec. 02, 2021 7:46 AM ETNextEra Energy, Inc. (NEE)NEP11 Comments
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  • NextEra Energy offers investors a compelling combination of dividend growth and capital appreciation upside potential.
  • The utility's growth trajectory is stellar, with an eye towards its growing merchant power operations and recent push into the water utilities space.
  • Our fair value estimate for shares of NEE sits at $102 per share with room for upside.
Wind farm at sunset.

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By Valuentum Analysts

On October 20, the electric utility firm NextEra Energy Inc. (NYSE:NEE) reported third quarter 2021 earnings that missed consensus top-line estimates but beat consensus bottom-line estimates. The company reaffirmed its medium-term guidance in conjunction with

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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Callum Turcan does not own shares in any of the securities mentioned above. Ratings and data as of November 4. NextEra Energy Inc (NEE) is included in Valuentum’s simulated ESG Newsletter portfolio. For updates, please visit us at www.valuentum.com. This article is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither Valuentum nor any of its affiliates own any securities mentioned in this article. Contact Valuentum for more information about its editorial policies.

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Comments (11)

Veritas1010 profile picture
Let it drop, preferably into the $60’s would love to add on a more reasonable price. It surely has dropped a lot already in a few weeks with the rest of th3 “renewables” sector in general.
MACaDamian profile picture
@Valuentum This company has been Free Cash Flow negative every year from 2012, the latest number being -10.55B equating to (4.95)/Share. How do you find value in this company?
good article.. I was stopped out of 1/2 of long based on the nee/spy pair which has gone from near 2 sigma cheap on 3yr horizon to near 1/2 sigma rich and seems to have rolled over and is now trading 1/2 sigma cheap.. on absolute basis close below 88.66 confirms
1/20 stopped back into NEE as the NEE/SPY pair as seemed to have bottomed.. on absolute basis close above 84.29 confirms
1/25 nee/spy pair approaching multiyear lows.. on absolute basis close below 77.27 indicates breakdown..stopped out of NEE as pair decisively make new multiyear low.. on absolute basis close below aforementioned 77.27 confirms. what a disaster :(
4/18 nee/spy pair seems to be rolling over after trading up to near fair value (3yr horizon)in late march ..on absolute basis close below 82.51 confirms
4/21 nee plunges ...close below 79.28 further confirmation
smurf profile picture
This author's been on SA for years, and deservedly so, in my opinion.

Another great article.
richjoy403 profile picture
Thanks Valuentum -- I've always given your analyses a 10% 'credibility premium' compared to the typical SA article.

As for $NEE, I've been long since 2011 (per Morningstar: 10-yr TR CAGR = 21.5%), and I consider it 'a growth stock masquerading as a stodgy ute').

Regarding the table showing signed contracts, do you know if those are for a specific part of NEE? When I look at their website, they break down energy generation into 3 different groupings (NEE owned, FPL owned, and NEE Resources owned) but the point is that this is overwhelmingly a natural gas company. Even with the new contracts, the primary source of revenue is natural gas so I guess I'm confused why NEE is being swept up in multiple expansion due to excitement about green energy. It seems like the brand of "next era" is more convincing that the actual numbers 😂
Veritas1010 profile picture

Good detailed overview of a fine company. Arguably the best in the space, and by looking at the biggest CEF’s and ETF’s in the field their management would agree. With YieldCo $NEP they are top notch.

By the way, it has been a long time…great call on the eventual and inevitable AT&T demise (way ahead by years I must add). Glad I too exited before the Titanic push-off on her maiden sail.

Agreed, there is still room to run with this leader in the field in a great regulatory market.

disc.: long $NEE, $NEP.
I hold NEE, WEC, XCEL and SO. NEE is valued at much higher multiples than XCEL, which also grows at a healthy clip. I suspect that XCEL will outperform NEE over the next decade, simply due to massive overvaluation of NEE. 35x profits for a highly indebted Ute makes no sense. XCEL trades at 20x profits, which is still not cheap.

I bought NEE for around 100 USD before the split so I can afford to hold. Still concerned about overvaluation....
Gary Kaltbaum was on the Varney show on Fox Business this morning and had many of the same laudatory things to say about NEE as this report does. Several years ago I had a conversation with an NEE engineer who unabashedly sang the praises of the company and its many new initiatives. I already owned stock at $12 a share and it reinforced my already positive outlook for it. I own other utilities but NEE has performed more like a growth stock than a safe utility. It is my second largest holding after Apple.
@HolmesDepot I'm not a utility investor. I find then hidebound and bereft of imagination, much less vision. I believe NEE is an exception.

I'm looking for a disrupter in this quasi-monopolistic space.
Adventureworldwide profile picture
Long NEE for a while. Good stuff.
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