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NextEra Energy, Incorporated (NEE), with a market cap of $153.2 billion, is a key electricity provider in North America. The Florida-headquartered company generates electricity using wind, solar, nuclear, and natural gas.
Shares of NextEra have underperformed the broader market considerably over the past year. NEE has declined 3.7% over this time frame, while the broader S&P 500 Index ($SPX) is up 26.7%. However, things are looking up, as the stock has soared 23.6% in 2024 alone, higher than SPX’s 9.4% YTD return.
Narrowing the focus, NEE has also underperformed the S&P 500 Utilities Sector SPDR (XLU). The exchange-traded fund has gained 3.2% over the past year compared to NEE’s decline for the period. However, NEE’s double-digit gains in 2024 outshines the ETF’s 12.5% returns over the same time frame.
Despite challenges from high interest rates, NextEra shares excelled in 2024 due to favorable factors like robust consumer growth in Florida and substantial investments in renewable energy and storage projects. These initiatives boosted the company's financial performance, marked by a notable rise in net income. Additionally, its impressive dividend payments attracted investors' interest, contributing to its outperformance against the broader index.
For the current fiscal year, ending in December, analysts expect NEE’s EPS to rise 7.3% year over year to $3.40. Moreover, the company’s earnings surprise history is solid. It exceeded the consensus estimate in each of the last four quarters.
While the company managed to beat the EPS estimate by 13.8% in the last reported quarter, its reported sales missed Wall Street’s estimates by 8.5%.
NextEra’s stock has a consensus “Moderate Buy” rating. Out of 17 analysts covering the stock, 11 rate it as a "Strong Buy," one suggests a "Moderate Buy," four say "Hold," and one advises “Strong Sell.”
This configuration has been consistent over the past months.
Earlier this month, BMO Capital maintained its "Outperform" rating on NextEra, increasing the price target from $72 to $78. The adjustment was prompted by changes in the executive team, notably the appointment of Brian Bolster as the new EVP and CFO. BMO analysts expressed confidence in the company's performance and aligned the target with peer group multiples.
Despite trading at a premium to its mean price target, the stock's Street-high target of $85 indicates a potential upside of 13.4%.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
