How to Play NextEra Energy Stock After Q1 Earnings Beat

NextEra Energy NEE reported first-quarter 2025 earnings results on April 23. Earnings per share improved 8.8% year over year, and total revenues improved 9% year over year due to solid financial and operational performance from Florida Power & Light Company (“FPL”) and NextEra Energy Resources. (See the Zacks Earnings Calendar to stay ahead of market-making news)Efficient execution of plans and smart capital investment allow NextEra Energy to report strong results quarter after quarter. The company surpassed expectations in all the past four quarters, with an average earnings surprise of 3.58%.Image Source: Zacks Investment ResearchHighlights of NextEra Energy Stock’s Q1 EarningsNextEra Energy reported first-quarter 2025 adjusted earnings of 99 cents per share, which beat the Zacks Consensus Estimate of 97 cents by 2.1%. The bottom line was also up nearly 8.8% year over year.In the first quarter, NextEra Energy’s operating revenues were $6.24 billion, which lagged the Zacks Consensus Estimate of $7.34 billion by 14.9%. However, the top line improved 9% year over year.In the first quarter, NextEra Energy’s subsidiary Energy Resources expanded its contracted renewables backlog by adding nearly 3.2 gigawatt (GW) of renewable projects in the quarter under discussion. Its backlog additions include nearly 200 megawatt (MW) of wind projects, 2 GW of solar projects, 900 MW of battery storage projects and 100 MW of wind repowering. The company’s renewables backlog is now more than 28 GW.FPL, NextEra Energy’s another subsidiary, remains committed to operating efficiently and delivering strong value to its customers, driven by strategic capital investments that serve their long-term interests. In the first quarter, FPL added 894 MW of new, cost-effective solar capacity, bringing its total owned and operated solar portfolio to more than 7.9 GW.In April, FPL filed its Ten-Year Site Plan with the Florida Public Service Commission. The 2025 plan identifies the need for over 17 GW of cost-effective solar generation throughout its service area in the next ten years, along with more than 7.6 GW of battery storage deployment. With this plan, FPL aims to expand solar energy’s contribution to its total energy generation from roughly 9% in 2024 to about 35% by 2034. FPL plans to invest nearly $50 billion from 2025 to 2029 to add more clean assets to its portfolio.NextEra Energy Shares Underperform Industry, Sector & S&PNextEra Energy’s shares have underperformed its industry, sector and S&P in the last year.Price Performance (One year)Image Source: Zacks Investment ResearchFactors Contributing Toward NEE Stock’s Stable PerformanceNextEra Energy’s unmatched scale, experience, and technology lead to predictable, superior returns. Its wide operation and increasing renewables assets create unmatched competitive advantages. Improving economic conditions in Florida allow the company to add new customers and cater to the rising demand.NEE boasts one of the lowest cost structures in the utility sector, due to its efficient operations, economies of scale in renewable energy, and strategically located projects. These advantages contribute to stronger profit margins and a distinct competitive edge.NEE’s Energy Resources continues to make long-term investments in clean energy assets. The company expects to be able to add 36.5-46.5 GW of new renewables in the 2024-2027 period to the generation portfolio via clean energy investments. Energy Resources’ renewable backlog is more than 28 GW now.Capital-intensive, domestic-focused NextEra Energy will benefit from the Fed’s decision to reduce interest rates. The U.S. Federal Reserve has lowered the benchmark rate by 100 basis points, bringing down rates to 4.25-4.5% from the 5.25-5.5% range. Further decline in interest rate is expected in 2025, which can further lower the capital servicing expenses of the company.NextEra Energy’s Earnings Estimates Moving NorthThe company expects its 2025 earnings per share in the range of $3.45-$3.70 compared with $3.43 a year ago. The Zacks Consensus Estimate for NEE’s 2025 and 2026 earnings per share indicates year-over-year growth of 7.29% and 7.92%, respectively. It expects to increase its earnings per share in the range of 6-8% annually through 2027 from the 2024 level.Image Source: Zacks Investment ResearchAnother prominent utility, Dominion Energy’s D Zacks Consensus Estimate for 2025 and 2026 earnings per share indicates year-over-year growth of 22.02% and 6.36%, respectively. Dominion Energy’s long-term (three to five years) earnings growth is currently pegged at 13.59%.NextEra Energy Stock Returns Higher Than its IndustryReturn on Equity (ROE) shows how effectively a company’s management is utilizing investors’ money to generate returns. The ROE of the company is better than its industry. The current ROE of the company is 12.06% compared with its industry’s 9.77X.Image Source: Zacks Investment ResearchNextEra Energy Raises Value of ShareholdersNextEra Energy plans to increase the dividend rate annually by 10%, at least through 2026, from the 2024 base, subject to its board’s approval. The current annual dividend of the company is $2.27 per share, and the dividend yield of 3.37% is better than the Zacks S&P 500 Composite’s yield of 1.67%. NextEra Energy has increased dividend for five times in the last five years. Check NEE’s dividend history here.Another utility, Duke Energy’s DUK current annual dividend is $4.18 per share, reflecting a dividend yield of 3.44%. Duke Energy has also raised its dividend five times in the last five years.NextEra Energy’s Shares Trading at a PremiumThe company is currently valued at a premium compared to its industry on a forward 12-month P/E basis. NextEra Energy is currently trading at 17.62X compared with the industry average of 14.32%.Image Source: Zacks Investment ResearchDuke Energy and Dominion Energy are also trading at a premium on P/E F12M basis, and are currently trading at 18.72X and 15.46X, respectively.Summing UpNextEra Energy continues with stable performance, backed by rising demand for clean energy in its service territories. NEE’s wide presence in the United States and declining interest rates will add to its benefit. NextEra’s efficient operations, economies of scale in renewable energy, and strategically located projects continue to contribute and boost its performance.Despite its premium valuation, investors can retain this Zacks Rank #3 (Hold) utility in their portfolio, given its stable ROE, rising earnings estimates and regular dividend payment capabilities.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NextEra Energy, Inc. (NEE): Free Stock Analysis Report Duke Energy Corporation (DUK): Free Stock Analysis Report Dominion Energy Inc. (D): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks