NextEra Energy’s 3Q15 earnings
NextEra Energy (NEE) reported its 3Q15 earnings on October 28, 2015. NEE’s yieldco, NextEra Energy Partners (NEP), also reported its 3Q15 earnings on the same day. NEE reported $1.93 in earnings per share (or EPS) during the quarter, surpassing Wall Street analysts’ expectation of $1.65 by 17%. However, the company missed analysts’ estimates of adjusted EPS by 3%. NEE’s 3Q15 EPS was also higher than the $1.50 in EPS in 3Q14. The company declared a dividend of $0.77 per share during the quarter, resulting in a dividend payout ratio of 40% of earnings during the quarter.
Market reaction to NextEra Energy’s 3Q15 earnings
While NextEra Energy beat analyst estimates on EPS, it underperformed expectations on adjusted EPS, which excludes non-recurring items. The stock dropped 1.1% on October 28, the day of the earnings release. The SPDR Utilities ETF (XLU), the industry representative, was also down 1.1% on October 28 while the broad-based SPDR S&P 500 ETF (SPY) was up 1.1% on the same day.
The utility sector was impacted on October 28 on account of the Fed’s unexpectedly hawkish statement regarding the possibility of a rate hike in December. As capital-intensive and high-dividend-paying companies, utilities have benefitted immensely from the low interest rates over the last several years. The yields on ten-year US Treasury securities increased by 14 basis points on October 28-29 on the Fed’s announcement.