NextEra Energy (NEE) Beats On Q3 Earnings, Reaffirms View

NextEra Energy, Inc. (NYSE:NEE) reported third-quarter 2016 adjusted earnings of $1.74 per share, outpacing the Zacks Consensus Estimate of $1.65 by 5.5%. Reported earnings were also up 8.8% year over year on the back of higher earnings from its subsidiaries, NextEra Energy Resources (“NEER”) and Florida Power and Light Company (“FPL”).

On a GAAP basis, NextEra Energy registered third-quarter earnings of $1.62 per share compared to $1.93 a year ago. The variance between adjusted and GAAP earnings was due to an unrealized mark-to-market gain of 17 cents from non-qualifying hedges, income tax-related expenses of 3 cents and merger-related expenses of 26 cents.

Total Revenue

In the third quarter, NextEra Energy’s operating revenues were $4,805 million, beating the Zacks Consensus Estimate of $4,704 million by nearly 2.2%. However, reported revenues decreased 3% from $4,954 million a year ago.

Segmental Results

Florida Power & Light Company (FPL): Earnings came in at $1.11 per share compared with $1.07 in the prior-year quarter. Revenues stood at $3,283 million, marginally up from $3,274 in the prior-year quarter.

NextEra Energy Resources (NEER): Quarterly earnings came in at 60 cents per share, up 22.5% from 49 cents in the year-ago quarter. Revenues dropped 9.8% to $1,430 million.

Corporate and Other: Quarterly earnings decreased from the year-ago level of 4 cents to 3 cents. Revenues in the reported quarter came in at $92 million, down 2.1%.

Operational Update

In the reported quarter, NextEra Energy’s total operating expenses were up 1.5% to $3,526 million, primarily due to higher merger-related expenses, and higher depreciation and amortization.

Operating income fell 13.6% to $1,279 million from $1,481 million a year ago.

NextEra’s interest expenses in the reported quarter were $369 million, up from $311 million in the prior-year quarter due to debt issuance.

Financial Update

NextEra Energy had cash and cash equivalents of $681 million as of Sep 30, 2016, compared with $571 million as of Dec 31, 2015.

Long-term debts as of Sep 30, 2016 were $28.2 billion, up from $26.7 billion as of Dec 31, 2015.

NextEra Energy’s cash flow from operating activities in the first nine months of 2016 was $5.3 billion, compared with $4.5 billion in the year-ago period.

Guidance

NextEra reiterated its earnings guidance in the range of $5.85–$6.35 for 2016 and $6.60–$7.10 for 2018. The company expects earnings to grow at a compound annual growth rate of 6% to 8% per year through 2018, off a 2014 base.

Upcoming Peer Releases

NiSource Inc. (NYSE:NI) is slated to report third-quarter 2016 earnings on Nov 1. The Zacks Consensus Estimate stands at 8 cents.

PG&E Corporation (NYSE:PCG) scheduled to report third-quarter 2016 earnings on Nov 4. The Zacks Consensus Estimate stands at $1.17.

NRG Energy, Inc. (NYSE:NRG) is slated to report third-quarter 2016 earnings on Nov 4. The Zacks Consensus Estimate stands at 88 cents.

Zacks Rank

NextEra energy currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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