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Can NextEra Energy Beat Analyst Estimates for 3Q15 Revenues?

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NextEra Energy’s 3Q15 revenue estimates

A panel of Wall Street analysts surveyed by Bloomberg expects NextEra Energy (NEE) to generate $4.8 billion in revenue in 3Q15. Analyst estimates are substantially higher than they were for 2Q15. In 3Q14, the company generated $4.65 billion in revenue. Analyst estimates correspond to a 3.8% expected increase in revenues over 3Q14.

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What may drive NextEra Energy’s revenue growth?

Two major factors are expected to drive NextEra Energy’s 3Q15 revenues:

  1. Warmer-than-expected weather across the United States in 3Q15 has led to more use of air conditioners. Electricity generation in the United States shot up in 3Q15 due to increased demand for electricity (XLU) for cooling. According to the US Energy Information Administration, electricity generation in July 2015 increased to 400 million MWh from 386 million MWh in July 2014. The data for the remaining months of the quarter is not yet published. According to Edison Electric Institute, electricity generation in the United States came in at 1.18 trillion MWh between June 27, 2015, and October 2, 2015, compared to 1.15 trillion MWh between June 28, 2014, and October 3, 2014. In the Southeast census region, where the majority of NEE’s operations are based, electricity production came in at 296 million compared to 289 million MWh last year. Southern Energy (SO) also operates in the Southeast.
  2. NextEra Energy has added new renewable energy capacities over the last year. The new facilities are expected to drive revenue growth in conjunction with higher demand for electricity for cooling.

The trend

NextEra Energy has beaten analysts’ estimates for revenues five times during the last eight quarters. While analysts are expecting 3.7% higher sales, they’re expecting adjusted EPS to rise by 6.4%. Let’s try to figure out the reason why in the next part of this series.

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