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How NextEra Energy Stock Is Currently Valued

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Jan. 18 2018, Updated 5:45 p.m. ET

Valuation

Even after a sharp recent correction, utilities have continued to trade at a premium valuation compared to their historical multiples. On January 17, 2018, NextEra Energy (NEE), the biggest constituent of the S&P 500 Utilities Index, was trading at an EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) valuation multiple of over 13x.

NEE’s five-year historical average valuation comes in at ~12x. Broader utilities are currently trading at an EV-to-EBITDA valuation of 10.5x.

In comparison, Dominion Energy (D) and Duke Energy (DUK) are currently trading at EV-to-EBITDA multiples of 14.5x and 12.0x, respectively, fairly higher than their historical averages.

NextEra Energy’s price-to-earnings multiple (or PE) currently stands at ~18x, fairly higher than the peer average of ~16x.

To learn more about top utilities (XLU) and their recent valuations, read An Investor’s Guide: A Look at the 10 Largest S&P 500 Utilities.

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