NEE

NextEra Energy Expects Continued Dividend Growth

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Image Source: NextEra Energy By Brian Nelson, CFA NextEra Energy (NEE) recently reported mixed third quarter results with non-GAAP earnings per share beating the consensus forecast but revenue coming up short relative to expectations. On an adjusted basis, third-quarter earnings were $2.348 billion, or $1.13 per share, compared to $2.127 billion, or $1.03 per share, in the third quarter of last year. FPL grew regulatory capital employed by approximately 8% year-over-year, while NextEra Energy Resources achieved a strong quarter of new renewables and storage origination, adding 3 gigawatts to its backlog. Management had the following to say about the results: NextEra Energy delivered strong third-quarter results, with adjusted earnings per share increasing by 9.7% year-over-year. We believe the continued strong … Read more

Thinking Slow: 3 Research Blind Spots That Changed the Investment World

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Dear members: — Daniel Kahneman in his text Thinking, Fast and Slow (1) divided the human psyche into two systems. The first system is instinctive and emotional, often set on autopilot, while the second system is slower and more logical, requiring a calculating conscious. Many of the maxims the investment world takes for granted today suffer from conclusions that are made rapidly, almost without thinking, driven by our first system, creating what I call research blind spots. — In World War II, Allied bombing raids were suffering from very high casualty rates. It was estimated that for those pilots that were flying at the beginning of the war, only about 10% survived, a terrible loss rate. Bombing was crucial to the Allied … Read more

NextEra Energy’s Outlook for the Next Few Years Looks Solid

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Image Source: NextEra Energy By Brian Nelson, CFA NextEra Energy (NEE) reported mixed second quarter results July 23 with revenue coming in slightly lower than forecast, but non-GAAP earnings per share exceeding the consensus forecast. On an adjusted basis, NextEra Energy’s earnings in the quarter were $2.164 billion, or $1.05 per share, compared to $1.968 billion, or $0.96 per share in the second quarter, of 2024. Management had the following to say about the results: NextEra Energy delivered strong second-quarter results with adjusted earnings per share increasing by 9.4% year-over-year. We believe the continued strong financial and operational performance at both FPL and NextEra Energy Resources positions us well to meet our overall objectives for the year. During the quarter, … Read more

3 Undervalued Stocks to Consider Buying Now

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Dear readers:   With the markets retracing most of their recent drawdown, we’re taking a victory lap as we didn’t panic, nor should have you. We highlighted our wait-and-see approach amidst the worst of the pullback, and we expect the Magnificent 7 (large cap growth and big cap tech) to continue to propel the markets higher, as they have done.   We’ve been busy rolling valuation models as we finetune our assumptions for a great number of companies under coverage. While doing so, we came across three undervalued stocks that are also included in the simulated newsletter portfolios. We think they’re prime for highlight.   The three stocks are UnitedHealth Group (UNH), Nvidia (NVDA) and Alphabet (GOOG). We spend a lot of time on discounted cash-flow valuation, … Read more

Magnificent 7 Earnings Reports Not Bad Thus Far

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By Brian Nelson, CFA   Shortly after Trump’s Liberation Day, where the President unveiled lofty tariffs on numerous countries, we released our wait-and-see outlook for the equity markets, which thus far has proven to be the right move, with the markets largely recovering from the depths reached in April. The S&P 500 (SPY), for example, is down just 3.3% year-to-date, excluding dividends.   A lot has happened since Liberation Day, including easing of tariffs to a 10% baseline for most, if not all, countries, with the key exception of China, where tariffs remain extremely elevated and prohibitive. Many countries are now reportedly negotiating trade agreements with the White House, and we expect China to be added to that list soon, even if … Read more

Trump Tariffs Higher than Expected; What We’re Doing

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By Brian Nelson, CFA The Trump tariff increases came in larger than what we were expecting, and it remains to be seen how they will flow through the global economy, as we monitor potential retaliatory tariffs from other countries. As it relates to the equity markets, we’re taking a wait and see approach at the moment as we monitor new policy changes related to trade, immigration, fiscal (tax), and regulations. In short, we’re not overreacting to the sell off as we won’t have a great handle on the tariff impact to companies for a few quarters when they report results post-tariff increases. That said, we’re expecting continued market volatility, with meaningful risk to the downside, before trade uncertainty alleviates in … Read more

NextEra Energy Reaffirms Earnings Outlook for Next Couple Years

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Image Source: NextEra Energy By Brian Nelson, CFA On January 24, NextEra Energy (NEE) reported mixed fourth quarter results with revenue missing the consensus forecast, but non-GAAP earnings per share coming in line. For the fourth quarter, net income attributable to NextEra Energy came in at $1.203 billion, or $0.58 per share, compared to $1.21 billion, or $0.59 per share, for the fourth quarter of 2023. On an adjusted basis, NextEra reported fourth-quarter earnings of $1.095 billion, or $0.53 per share, compared to $1.067 billion, or $0.52 per share, in the same period last year. Management had a lot to say about the quarter: NextEra Energy had an excellent year of execution in 2024, growing full-year adjusted earnings per share … Read more

NextEra Energy Reaffirms Outlook

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Image: NextEra Energy’s shares have bounced back nicely from their October 2023 lows. By Brian Nelson, CFA On October 23, NexEra Energy (NEE) reported solid third-quarter results with net income attributable to NextEra Energy on a GAAP basis of $1.852 billion, or $0.90 per share, which compares to $1.219 billion, or $0.60 per share, for the third quarter of last year. On an adjusted basis, third quarter earnings came in at $2.127 billion, or $1.03 per share, compared to $1.92 billion, or $0.94 per share, in the third quarter of last year. Management had a lot to say in the press release: NextEra Energy delivered strong third-quarter results, increasing adjusted earnings per share by approximately 10% year-over-year, reflecting continued solid … Read more

An Important Measure of Leverage for Dividend-Growth and Income-Oriented Shareholders, One That Is Dividend-Adjusted

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As more and more investors rely on company dividends for income, dividends, in our view, have become more debt-like commitments in nature, especially from the perspective of dividend-growth or income-oriented shareholders. Years ago, we rolled out a measure of financial leverage that considers both the company’s debt and the present value of its future expected cash dividend obligations, which, in the eyes of die-hard dividend-growth or income-oriented shareholders, may be implicitly assumed to be debt-like commitments in substance. We think this leverage ratio can be used in conjunction with the Dividend Cushion ratio to gain additional insight into the dividend-paying financial health of an entity. Note: There is often great confusion with respect to published measures of financial leverage, and … Read more

NextEra Energy’s Outlook Looks Great

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Image Source: NextEra Energy By Brian Nelson, CFA NextEra Energy (NEE) recently reported mixed second quarter results with revenue coming in light, but non-GAAP earnings per share exceeding the consensus forecast. On an adjusted basis, NextEra Energy’s earnings for the second quarter of 2024 were $0.96 per share, up from $0.88 per share in the same period a year ago. Management’s outlook, as provided in the press release, was quite upbeat: NextEra Energy delivered strong second-quarter results, increasing adjusted earnings per share by more than 9% year-over-year, reflecting continued solid financial and operational performance at both our businesses. At FPL, we continued to invest to support strong customer growth, while keeping O&M low and reliability high. At NextEra Energy Resources, … Read more