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What Drove NextEra Energy’s Earnings in 4Q16?

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NextEra Energy’s earnings

Juno Beach-based NextEra Energy (NEE) is estimated to report earnings of $1.31 per share for 4Q16. It reported earnings of $1.09 per share in 4Q15. NextEra management has given an EPS (earnings per share) guidance of $5.85–$6.35 for 2016.

NextEra Energy is one of the fastest-growing utilities in the sector. Its earnings have risen ~8%, compounded annually, during the past ten years. By comparison, US utilities (XLU) have grown ~4% in the last few years.

NEE eps

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Earnings drivers

NextEra Energy’s principal regulated utility, FPL (Florida Power & Light), contributes more than 65% of its total net income. The weather and customer base are expected to be the most important drivers for FPL in 4Q16. Colder than normal weather in 4Q16 is likely to improve FPL’s performance during the quarter.

NextEra Energy’s earnings growth rate is expected to accelerate in the longer term, as Oncor, the utility business in Texas, could offer a higher growth rate than in Florida, where NEE has principal operations.

NextEra’s performance for the past few quarters has been effectively uplifted due to a solid performance from its both utility and non-utility segments. Its continued investments in regulated rate bases have fortified its regulated operations, the contributions of its contracted clean energy portfolio, and its investments in natural gas pipelines—all of which have recently shaped NextEra Energy’s growth.

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