NextEra Energy, Inc. (NEE) Is a Trending Stock: Facts to Know Before Betting on It

NextEra Energy (NEE) has been one of the most searched-for stocks on Zacks.com lately. So, you might want to look at some of the facts that could shape the stock's performance in the near term.Shares of this parent company of Florida Power & Light Co. Have returned +1.3% over the past month versus the Zacks S&P 500 composite's +2.1% change. The Zacks Utility - Electric Power industry, to which NextEra belongs, has gained 1.6% over this period. Now the key question is: Where could the stock be headed in the near term?Although media reports or rumors about a significant change in a company's business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.Revisions to Earnings EstimatesHere at Zacks, we prioritize appraising the change in the projection of a company's future earnings over anything else. That's because we believe the present value of its future stream of earnings is what determines the fair value for its stock.We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors' interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.NextEra is expected to post earnings of $0.99 per share for the current quarter, representing a year-over-year change of +8.8%. Over the last 30 days, the Zacks Consensus Estimate has changed -5.9%.The consensus earnings estimate of $3.68 for the current fiscal year indicates a year-over-year change of +7.3%. This estimate has changed +0.2% over the last 30 days.For the next fiscal year, the consensus earnings estimate of $3.97 indicates a change of +8% from what NextEra is expected to report a year ago. Over the past month, the estimate has changed +0.2%.Having a strong externally audited track record, our proprietary stock rating tool, the Zacks Rank, offers a more conclusive picture of a stock's price direction in the near term, since it effectively harnesses the power of earnings estimate revisions. Due to the size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, NextEra is rated Zacks Rank #2 (Buy).The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:12 Month EPSProjected Revenue GrowthWhile earnings growth is arguably the most superior indicator of a company's financial health, nothing happens as such if a business isn't able to grow its revenues. After all, it's nearly impossible for a company to increase its earnings for an extended period without increasing its revenues. So, it's important to know a company's potential revenue growth.For NextEra, the consensus sales estimate for the current quarter of $6.99 billion indicates a year-over-year change of +21.9%. For the current and next fiscal years, $29.76 billion and $32.43 billion estimates indicate +20.2% and +9% changes, respectively.Last Reported Results and Surprise HistoryNextEra reported revenues of $5.39 billion in the last reported quarter, representing a year-over-year change of -21.7%. EPS of $0.53 for the same period compares with $0.52 a year ago.Compared to the Zacks Consensus Estimate of $6.51 billion, the reported revenues represent a surprise of -17.33%. The EPS surprise was +3.92%.The company beat consensus EPS estimates in each of the trailing four quarters. The company could not beat consensus revenue estimates in any of the last four quarters.ValuationWithout considering a stock's valuation, no investment decision can be efficient. In predicting a stock's future price performance, it's crucial to determine whether its current price correctly reflects the intrinsic value of the underlying business and the company's growth prospects.Comparing the current value of a company's valuation multiples, such as its price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), to its own historical values helps ascertain whether its stock is fairly valued, overvalued, or undervalued, whereas comparing the company relative to its peers on these parameters gives a good sense of how reasonable its stock price is.The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to both traditional and unconventional valuation metrics to grade stocks from A to F (an An is better than a B; a B is better than a C; and so on), is pretty helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.NextEra is graded C on this front, indicating that it is trading at par with its peers. Click here to see the values of some of the valuation metrics that have driven this grade.ConclusionThe facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about NextEra. However, its Zacks Rank #2 does suggest that it may outperform the broader market in the near term.Just Released: Zacks Top 10 Stocks for 2025Hurry – you can still get in early on our 10 top tickers for 2025. Handpicked by Zacks Director of Research Sheraz Mian, this portfolio has been stunningly and consistently successful. From inception in 2012 through November, 2024, the Zacks Top 10 Stocks gained +2,112.6%, more than QUADRUPLING the S&P 500’s +475.6%. Sheraz has combed through 4,400 companies covered by the Zacks Rank and handpicked the best 10 to buy and hold in 2025. 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