uploads///

Renewables Are a Growth Driver for NextEra Energy

By

Jan. 19 2016, Updated 1:03 p.m. ET

Price targets

A consistent focus on renewables and the expansion of the regulated segment are likely to be the key factors driving NextEra Energy’s (NEE) growth in the next couple of years. Its management has already forecast an accelerated earnings growth rate of 6%–8% through 2018.

NextEra has a capital spending plan of $15 billion for the next four years. It will be interesting to see its performance with the expected rising interest rates. The table above displays the price targets and recommendations of NextEra Energy given by Wall Street analysts for the next one year.

Article continues below advertisement

Recommendations

According to the analysts’ consensus, NextEra Energy is going to offer better returns to its investors. It has an estimated upside of 13% with a median price target of $119 in the next one year. It’s currently trading at $105.2. Of the 25 analysts tracking NextEra, five analysts are recommending a “Hold” while 20 analysts are recommending a “Buy.” None of the analysts have a “Sell” recommendation for NEE as of January 18, 2016.

Southern Company (SO) has a price target of $47.2, amounting to a possible upside of a mere 1.3% against its current market price of $46.6. Duke Energy (DUK) has an estimated upside of ~6% in one year according to analyst estimates. It has a price target of $75.9 against its current market price of $71.8.

Article continues below advertisement

NextEra Energy’s outlook

NextEra expects its earnings growth to accelerate to 6%–8% in the next couple of years. According to its management guidance, the 2018 earnings are expected to range between $6.60–$7.10 per share. NextEra Energy Partners (NEP), a yieldco[1. A dividend growth-oriented public company] of NEE, more than doubled its renewables portfolio size since its IPO (initial public offering) in 2014. The management expects its adjusted EBITDA[2. Earnings before interest, tax, depreciation, and amortization] to double from its IPO levels and cross the mark of $500 million. NEP’s financials are consolidated with NextEra Energy Resources.

NextEra is making robust investments in developing batteries for power storage. While this is still in its infancy, it has the potential to be a game-changer for the whole renewable energy (PBW)(TAN) industry. With a heavy capital expenditure plan and a rising interest rate environment, it will be interesting to see whether NextEra Energy sustains its growth momentum.

Advertisement

More From Market Realist

  • Honeywell sign
    Earnings Report
    CNBC Pro Stocks to Buy Before Q1 Earnings
  • Men walking by Morgan Stanley headquarters
    Financials
    Morgan Stanley’s (MS) Stock Forecast Before Q1 Earnings
  • Carnival cruise ship sailing
    Consumer
    Carnival's (CCL) Stock Forecast Before Q1 Business Update
  • GameStop store
    Consumer
    GME's Earnings Are Coming: Will It Be Mayday for Shorts or WallStreetBets?
  • CONNECT with Market Realist
  • Link to Facebook
  • Link to Twitter
  • Link to Instagram
  • Link to Email Subscribe
Market Realist Logo
Do Not Sell My Personal Information

© Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.