NextEra Energy / NEE vs. NEPRenewable energy investments are in high demand by many investors, but many of these companies aren't very profitable yet or are unattractive due to other fundamental issues. NextEra Energy and NextEra Energy Partners are outliers, however, as they are highly profitable while also providing a growing income stream for their owners. In this report, I'll show why I believe that NextEra Energy Partners, LP is the significantly more attractive pick at current prices, relative to the mother entity NextEra Energy, Inc
Renewable energy is in high demand around the world. Countries, corporations, and even individuals are spending heavily to increase the generation of electricity via hydro, solar, wind, geothermal energy, and so on. Many investors also want to invest in this macro megatrend, but not too many investment choices seem suitable for that. Many companies in this space are either not profitable or trading at very elevated valuations. Some have been clear bubble stocks in the past, along with many electric vehicle stocks that were also hyped up during the pandemic, which didn't work out for investors. In order to decide whether NEE or NEP is more attractive for investment today, we'll look at a couple of factors that investors might want to consider when making an investment decision.
Both companies are marketed as renewable energy investments, but their actual exposure to renewable energy is very different. NextEra Energy Partners is highly exposed to renewable energy, as that industry contributes the vast majority of its revenue and profit: The company reports that around 80% of its revenue were created with its renewable energy business, both in the most recent quarter and in the Q1-Q3 2022 time frame. By contrast, around 20% of NEP's revenue was generated by its pipeline services, which could be called a hydrocarbon or "old energy" business.
NextEra Energy Inc., on the other hand, is not as heavily exposed to renewable energy. NEER, NEE's renewable energy business unit, contributed just $1.6 billion of the company's overall revenue of $6.7 billion during the most recent quarter, or 24%. The majority of NEE's revenue is contributed by Florida Power & Lighting, a regulated electric utility. FPL has some renewable energy assets as well, but also uses non-renewable power assets for electricity generation on top of offering distribution etc. Overall, that makes NEE a less renewable-focused company relative to NEP. That does not have to be a bad thing per se, but for an investor that seeks to add renewable energy exposure, NEP with its ~80% exposure seems more suitable than NEE, which is more comparable to a typical regulated electric utility.
A stock's valuation should always be considered when making investment decisions. Today, NEE trades at 28x this year's expected net profits, using the midpoint of management's guidance range. That's a pretty high valuation for an electric utility, and explains why NEE only receives a Valuation Score of F. Meanwhile, NEP is trading at just 8x CAFD today, which translates into a cash flow yield of 12.5% (versus an earnings yield of less than 4% for NEE). Not surprisingly, NEP has a way better Valuation Score of C+. NEP's valuation is thus not perfect, either, but easily outclasses the valuation NEE trades at. For those that prefer to look at net profit for both companies, although one can argue that cash flow is more telling for an LP like NEP, NEP looks way cheaper than NEE, as NEP's forward earnings multiple is 13.5 -- less than half as much compared to the valuation NEE trades at, despite NEP's better growth. Both companies have enjoyed healthy growth in recent years. During the most recent quarter, NEP grew its EBITDA (earnings before interest, taxes, depreciation, and amortization) by 13% year over year, while CAFD (cash available for distributions) grew by an even better 17% year over year.
NEP continues to add new assets regularly, which drives its growth, although organic growth via rate increases and output optimization also plays a role. Overall, NEP isn't very large yet, with a market capitalization of $7 billion. An acquisition worth a couple hundreds of millions of dollars is thus enough to move the needle -- that's not true for NEE, which is valued at around $170 billion. Only very large takeovers or new projects move the needle for NextEra Energy, Inc.
NEE forecasts that its earnings per share for 2022 will total $2.85 (final results have not been released yet), which would be up by 12% year over year. For a large electric utility, that's still pretty strong, but it's not as exciting as the growth that NEP has been delivering. Going forward, that should hold true as well. NEE is forecasting earnings per share growth of 7% for 2023, while EPS forecasts for 2024 and 2025 stand at 9% and 7%, respectively, using the midpoint of the EPS guidance range for each respective year.NEP, meanwhile, will likely deliver double-digit growth going forward, at least if management is correct. The company forecasts that its cash available for distribution run rate will be around $820 million at the end of 2023, which would be up from $730 million in 2022, which makes for a 12% increase. While management has not given out guidance numbers for 2024 and beyond, the higher growth in 2023, coupled with the fact that driving meaningful inorganic growth is easier as smaller acquisitions can have a larger impact, make me believe that NEP has a good chance of growing faster than NEE in 2024 and 2025 as well. That also impacts the dividend growth rate, which gets us to the next point.
NEE
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NextEra Energy Surges
NextEra Energy ( NYSE:NEE ), the leading renewable energy generator in the United States, has reported a fourth-quarter profit that surpassed Wall Street expectations. The company's impressive performance is attributed to the decline in natural gas prices, boosting its regulated utilities business. This development positions NextEra ( NYSE:NEE ) as a standout player in the evolving energy landscape, showcasing resilience and adaptability.
Lower Natural Gas Prices Drive Profitability:
NextEra's fourth-quarter success is largely credited to a 14% decrease in natural gas prices quarter-over-quarter. As a major producer of renewable energy, the company's reliance on natural gas for electricity generation has proven advantageous amid declining prices. This strategic position has fortified its regulated utilities business, contributing to a profit beat that exceeded analysts' estimates.
Florida Power & Light Shines:
The regulated utilities arm of NextEra, Florida Power & Light, experienced notable growth, increasing its average customer base by nearly 81,000 compared to the same quarter in 2022. Despite a 1.8% dip in retail sales due to weather-related challenges, the company's ability to expand its customer base is a testament to its resilience and customer-centric approach.
Challenges and Opportunities in Clean Energy:
NextEra Energy Resources, the clean energy unit of the company, faced headwinds in adjusted earnings per share, primarily due to higher-interest-rate expenses and lower wind generation from existing assets. However, CEO John Ketchum remains optimistic, highlighting the addition of 9,000 MW of new renewables and battery storage projects in 2023, marking a record-breaking year for originations. The company's commitment to sustainability is underscored by its plans to re-power an additional 245 MW of wind facilities, solidifying its position as a leader in clean energy solutions.
Financial Strength and Outlook:
NextEra's financial performance in the fourth quarter outpaced analyst forecasts, reporting revenue of $6.87 billion compared to the predicted $5.698 billion. The company's resilience in the face of challenges underscores its financial strength and strategic positioning. NextEra maintained its adjusted earnings-per-share outlook for 2024, projecting a range between $3.23 and $3.43, signaling confidence in its continued success.
Conclusion:
NextEra Energy's robust fourth-quarter performance reflects its ability to navigate market dynamics successfully. The company's strategic focus on renewable energy, coupled with astute management of natural gas dynamics, positions it as a key player in the evolving energy sector. As NextEra continues to expand its clean energy portfolio and demonstrate financial resilience, investors and industry observers are likely to keep a close eye on this trailblazing energy giant.
$NEE performing well lately$NEE broke out of an inverse head & shoulder pattern.
Downside is likely over for this, at least for now. Keep an eye on the next resistance levels to look for an exit.
73ish to 86ish is not a ton but it helps pay the bills.
We may also get 2 dividends if it holds until May'ish.
#utility
NEP - decent short term opportunityPublishing an update to an unsuccessful projection with NYSE:NEP last month. It was sitting at the 200MA and it's most recent drawdown had triggered a fear signal. These are less common in the utilities sector, which made it look like a decent contrarian opportunity. Throughout the remainder of March we saw a rotation out of safety sectors like utilities and staples into growth sectors like tech and discretionary, and NEP fell another 13% (wicking below where I would normally place my stop loss).
This is an interesting price point for NEP. It's at the center of its long term channel, with the lower band of the channel historically being tested during broad market drawdowns. Earnings are coming up this month and NEP has a history of slight increases after both earnings beats and misses. We see a recent lower low (not good) but bullish divergence between RSI and price (good). Additionally, when a major support level like the 200MA fails that level typically becomes overhead resistance, so any favorable opportunity here will likely be brief.
While NEP and utilities may experience continued downtrend if the broader market continues to favor growth, an entry here with profit taking at the 200MA will represent a good opportunity to accumulate. I only follow this strategy for positions that I plan to hold for the long term. The next major support level below this is ~$52.50
NEE XLU
NEE, 10d+/24.64%rising cycle 24.64% more than 10 days.
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This data is analyzed by robots. Analyze historical trends based on The Adam Theory of Markets (20 moving averages/60 moving averages/120 moving averages/240 moving averages) and estimate the trend in the next 10 days. The white line is the robot's expected price, and the upper and lower horizontal line stop loss and stop profit prices have no financial basis. The results are for reference only.
Nextera Range Bounded traders haven buy low sell high Ongoing sideways range is evident since 2021.
This is perfect for mean reversion traders who buy high and sell low within the range.
The previous trend was up, so we can anticipate the price will bounce up from here and break above eventually.
The American markets are also aiming up, so bullish bias is starting to lurk.
NextEra Energy Left its sparks behind. NEEA beginning of a third leg in this flat formation. Early days, as nil confirmation yet, having said that the wave morphology is already highly suggestive of the early throes of an impulse. Volatility flipped not too long ago on the daily as well.
We are not in the business of getting every prediction right, no one ever does and that is not the aim of the game. The Fibonacci targets are highlighted in purple with invalidation in red. Confirmation level, where relevant, is a pink dotted, finite line. Fibonacci goals, it is prudent to suggest, are nothing more than mere fractally evident and therefore statistically likely levels that the market will go to. Having said that, the market will always do what it wants and always has a mind of its own. Therefore, none of this is financial advice, so do your own research and rely only on your own analysis. Trading is a true one man sport. Good luck out there and stay safe.
NextEra Energy is ready for a new Era of bears. NEEIndeed. There is a harmonic reversal pattern potentially at play here. It is not shown, because I could not be bothered. Otherwise due for a quick pivot and drop on this one anyway, given the shown evidence.
We are not in the business of getting every prediction right, no one ever does and that is not the aim of the game. The Fibonacci targets are highlighted in purple with invalidation in red. Fibonacci goals, it is prudent to suggest, are nothing more than mere fractally evident and therefore statistically likely levels that the market will go to. Having said that, the market will always do what it wants and always has a mind of its own. Therefore, none of this is financial advice, so do your own research and rely only on your own analysis. Trading is a true one man sport. Good luck out there and stay safe!
NEE Daily TimeframeSNIPER STRATEGY (new version)
It works ALMOST ON ANY CHART.
It produces Weak, Medium and Strong signals based on consisting elements.
NOT ALL TARGETS CAN BE ACHIEVED, let's make that clear.
TARGETS OR ENTRY PRICES ARE STRONG SUPPORT AND RESISTANCE LEVELS.
ENTRY PRICE BLACK COLOR
TARGETS GREEN COLOR
STOP LOSS RED COLOR
DO NOT USE THIS STROTEGY FOR LEVERAGED TRADING.
It will not give you the whole wave like any other strategy out there but it will give you a huge part of the wave.
The BEST TIMEFRAMES for this strategy are Daily, Weekly and Monthly however it can work on any timeframe.
Consider those points and you will have a huge advantage in the market.
There is a lot more about this strategy.
It can predict possible target and also give you almost exact buy or sell time on the spot.
I am developing it even more so stay tuned and start to follow me for more signals and forecasts.
START BELIEVING AND GOOD LUCK
HADIMOZAYAN
NEE PUT opportunityWe are seeing a text book setup of bearishness on NEE. Buying momentum has been decreasing, Willy oscillator indicating a sell, and while the weis wave also displaying a lack of buying volume showing a lack of interest towards the long side on NEE. We are seeing a Fibonacci cluster around 78-80 allowing for a safe exit on NEE puts.
Bearish Signals
-Squeeze indicator
-Willy Oscillator
-Weis Wave
Price Target
-78-80