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NextEra Energy’s Upbeat Q2 Earnings Lifts Investors’ Sentiment

Story Highlights

NextEra Energy’s second-quarter 2022 results reflect its top-line and operational strength. The impact of upbeat earnings and prospects have overshadowed any disappointment over sales miss.

Energy company NextEra Energy, Inc. (NYSE: NEE) has reported upbeat earnings for the second quarter of 2022. This, along with encouraging comments by the company’s officials, lifted the market sentiments for the stock, which rose 1.8% on Monday. NextEra Energy’s last closing price was $80.25.

Earnings per share surpassed the consensus estimate by 6.6%. However, sales lagged expectations by 3.2%.

Key Highlights of NextEra’s Q2 Results

In the quarter, NextEra’s adjusted earnings stood at $0.81 per share, above the consensus estimate of $0.76 per share. Also, the bottom line grew 14.1% from the year-ago tally of $0.71 per share.

The company’s President and CEO, John Ketchum, said, “Adjusted earnings per share increased approximately 14% year-over-year, reflecting continued strong financial and operational performance at both FPL and NextEra Energy Resources.”

Revenues were $5.18 billion in the quarter, below the Street’s estimate of $5.35 billion. However, the top line expanded 31.8% year-over-year.

On a segmental basis, revenues of Florida Power & Light Company (FPL) grew 24.1% year-over-year to $4.43 billion, and that of NextEra Energy Resources (NEER) expanded 105.3% to $0.78 billion. It is worth noting that NEER increased its backlog by 2,035 net megawatts (MW).

The impact of revenue growth was partially offset by a 24.2% rise in operating expenses. Operating income in the quarter was $0.95 billion, up 85.9% from the year-ago quarter.

NextEra’s Capital Deployment Activities

In the first half of 2022, the company’s cash position improved drastically, with cash and cash equivalents increasing 347.7% from 2021-end to $2.86 billion. Cash flow generated from operating activities totaled $4.79 billion in the first half, up 37.1% year-over-year.

Of the available resources, the company used $4.01 billion on capital expenditures (FPL), $4.94 billion on the independent power and other investments of NEER, and $1.54 billion for the repayment of long-term debts. At the end of the first half, the company’s long-term debts were $53.38 billion, up 4.8% from 2021-end.

Also, the company used $1.67 billion for rewarding shareholders with dividends.

NextEra’s Projections

For 2022, the company anticipates adjusted earnings to be within the $2.80-$2.90 per share range.

Earnings per share are predicted to be $2.98-$3.13 in 2023, $3.23-$3.43 in 2024, and $3.45-$3.70 in 2025. Also, the dividend rate is expected to grow by 10% from 2022 to 2024. The company’s current dividend yield is 2.02%.

Wall Street Is Optimistic on NextEra

On TipRanks, the company has a Strong Buy consensus rating based on nine Buys and three Holds. NEE’s average price forecast of $88.58 mirrors upside potential of 10.38% from the current level. Shares of NextEra have grown 4.3% over the past year.

Hedge Funds Are Positive on NextEra

According to TipRanks, hedge funds are Very Positive on NEE, evident from their increase in holdings of NEE by 1.5 million shares in the last quarter.

Prospects Appear Bright for NextEra

The company’s CEO has opined that NextEra “is well-positioned to meet its overall objectives” for 2022. The company’s investments, increased backlog, and high demand for energy will be advantageous. Also, these tailwinds could help the company overcome the adverse impact of high operating expenses and debts.

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