Will FPL's Performance Drive Q3 Earnings For NextEra (NEE)?

NextEra Energy, Inc. (NYSE:NEE) is scheduled to release third-quarter 2017 results before the opening bell on Oct 26. Last quarter, this utility company reported a positive earnings surprise of 5.7%. Let’s see how things are shaping up prior to this announcement.

Factors at Play

The company commenced 2017 on a solid note by bringing online additional natural gas pipelines during the first few months. Moreover, shares of NextEra Energy have outperformed the industry’s rally in the last three months.

NextEra Energy’s, Florida Power & Light Company (“FPL”) segment has been successful in attracting and adding new customers to its portfolio. Notably, FPL has also enjoyed the benefit of favorable economic conditions in its service territories, especially due to increased demand for utility services. Further, its focus on clean energy has drastically lowered emission levelsand led to significant savings for customers.

For the third quarter, the Zacks Consensus Estimate for NextEra Energy’s revenues is pegged at $4,893 million, indicating 4.01% year over year and 12.4% sequential increase. We expect the increase in total revenues to be driven by higher contribution from its FPL segment.

However, we expect Hurricane Irma to adversely impact the company’s earnings. NextEra Energy’s earnings are projected to be $1.75 per share reflecting a sequential drop by a penny.

Earnings Whispers?

Our proven model does not conclusively show that NextEra is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here, as you will see below.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate of $1.74 and the Zacks Consensus Estimate of $1.74 is 0.00%.

Zacks Rank: NextEra is a Zacks Rank #3, increasing the possibility of a beat, but the 0.00% ESP makes it unlikely that this will see fruition this season.

As it is, we caution against stocks with a Zacks Rank #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

NextEra Energy, Inc. Price and EPS Surprise

Stocks to Consider

Instead, here are a few players from the industry that have the right combination of elements to post an earnings beat this quarter.

NiSource, Inc (NYSE:NI) has an Earnings ESP of +7.69%. The company flaunts a Zacks Rank #2 and is anticipated to report third-quarter 2017 earnings on Nov 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Allete, Inc. (NYSE:ALE) has an Earnings ESP of +2.89%. It carries Zacks Rank #2and is expected to report third-quarter 2017 earnings on Nov 1.

Pinnacle West Capital Corporation (NYSE:PNW) has an Earnings ESP of +0.14%. It carries Zacks Rank #3andis expected to report third-quarter 2017 earnings on Nov 3.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>