Why NextEra Energy Continues to Impress
NextEra Energy hit a new 52-week high
NextEra Energy (NEE) stock hit a fresh 52-week high of $150.18 on August 16, 2017. NextEra Energy has shown an incredible run with its stock gaining more than 25% so far this year. It has beaten the Utilities Select Sector SPDR (XLU) by a huge margin. XLU has gained 12% during the same period.
Morgan Stanley analyst Stephen Byrd mentioned NextEra Energy as his one of the favorite utilities, as reported by Barron’s. According to Byrd, NextEra Energy’s cash flow generation and the relatively early expansion of its renewables portfolio are among the factors that make the utility stand tall among peers. He also expects NextEra Energy’s above average per share earnings growth to continue in the future.
Interested in DYN? Don't miss the next report.
Receive e-mail alerts for new research on DYN
How NextEra manages high growth
Recently, NextEra Energy stock witnessed a solid uptrend because of its better-than-expected quarterly earnings. It’s one of the fastest growing utilities in the country. It has had per share earnings growth of more than 8% compounded annually in the last ten years—nearly double utilities’ average earnings growth.
Florida is the third most populous state in the country. Its population growth is much higher than the national average. Naturally, it helps expand Florida Power & Light’s customer base. NextEra Energy’s healthy customer base expansion of ~1.5% annually drives its earnings higher.
Also, NextEra Energy’s natural gas–dominated generation mix boosted its earnings in the last few years. Lower natural gas prices helped the Florida-based utility trim down fuel expenses significantly last year. Since 2014, NextEra Energy’s fuel and purchased power expenses have been falling.
Byrd’s other favorite utilities include Dynegy (DYN), PG&E (PCG), Sempra Energy (SRE), and FirstEnergy (FE). According to Byrd, the key factors that could drive these particular utilities going forward are tax reforms, decreasing costs of renewables, and the government’s expected support for coal and nuclear energy.