18 Jan

What Could Drive NextEra Energy’s Q4 Earnings?

WRITTEN BY Vineet Kulkarni


NextEra Energy (NEE) is expected to report an EPS of $1.54 for the quarter ending December 31. The company’s EPS indicates 23% YoY growth compared to its EPS in the fourth quarter of 2017. NextEra Energy’s estimated EPS for the fourth quarter will likely meet its fiscal 2018 earnings guidance of $7.70 per share—earnings growth of 16% YoY.

NextEra Energy is one of the fastest-growing utilities in the country. The company’s earnings are expected to increase 6%–8% per year through 2021. In comparison, utilities at large are aiming for annual earnings growth of 4%–6% for the next few years.

What Could Drive NextEra Energy’s Q4 Earnings?

Long-term earnings drivers

NextEra Energy’s unparalleled renewables portfolio, vast regulated operations in Florida, and healthy combination of competitive operations have driven its earnings in the last few years. The company’s earnings have risen more than 8% compounded annually in the last five years, while utilities have grown 4% during the same period.

NextEra Energy agreed to buy Southern Company’s subsidiaries Gulf Power, Florida City Gas, and two natural gas power plants in May 2018. The acquisition is expected to be $0.15 and $0.20 accretive to NextEra Energy’s EPS in 2020 and 2021, respectively.

Due to NextEra Energy’s sturdy earnings growth, the company had superior dividend growth. In the last five years, NextEra Energy’s dividend per share increased ~11% compounded annually. In comparison, utilities (XLU) at large increased their dividend almost 4% during the same period. NextEra Energy continues to aim for ~13% annual dividend growth through at least 2020.

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