NextEra Energy Inc (NYSE:NEE)’s Earnings Grew 68.3%, Is It Enough?
Today I will take a look at NextEra Energy Inc’s (NYSE:NEE) most recent earnings update (30 September 2017) and compare these latest figures against its performance over the past few years, as well as how the rest of the electric utilities industry performed. As an investor, I find it beneficial to assess NEE’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. See our latest analysis for NextEra Energy
How Did NEE’s Recent Performance Stack Up Against Its Past?
I use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This technique enables me to examine many different companies in a uniform manner using new information. For NextEra Energy, the latest twelve-month earnings is $4,189.0M, which, relative to the previous year’s level, has moved up by a significant 70.77%. Given that these values may be relatively short-term, I have estimated an annualized five-year figure for NextEra Energy’s earnings, which stands at $2,369.5M. This shows that, on average, NextEra Energy has been able to gradually grow its earnings over the past couple of years as well.
What’s enabled this growth? Well, let’s take a look at if it is solely owing to industry tailwinds, or if NextEra Energy has seen some company-specific growth. Over the last couple of years, NextEra Energy grew its bottom line faster than revenue by efficiently controlling its costs. This has caused a margin expansion and profitability over time. Viewing growth from a sector-level, the US electric utilities industry has been growing, albeit, at a unexciting single-digit rate of 5.63% over the past twelve months, and 3.58% over the previous few years. This shows that any uplift the industry is deriving benefit from, NextEra Energy is able to leverage this to its advantage.
What does this mean?
NextEra Energy’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While NextEra Energy has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research NextEra Energy to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for NEE’s future growth? Take a look at our free research report of analyst consensus for NEE’s outlook.
2. Financial Health: Is NEE’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
