NextEra: Shares Drop Over 8% on Mixed Q4 Results, CEO Step Down

NextEra Energy, Inc. (NYSE: NEE) posted mixed results for the fourth quarter of 2021. Quarterly adjusted earnings beat analysts’ estimates, while revenues missed expectations. 

Meanwhile, as part of a planned leadership succession process, NextEra Energy announced that John Ketchum will become the new president and CEO of the company, effective March 1. Currently, he serves as the president and CEO of NextEra Energy Resources, LLC (NEER), the clean energy business of the company. Notably, current chairman and CEO Jim Robo will serve as an executive chairman until then to ensure a smooth transition. 

Following the company’s update, shares of the energy company dropped 8.3% to close at $75.10 on Tuesday. 

NextEra Energy is one of the largest electric power generators in the United States. Through its Florida Power & Light Company (FPL) business, the company provides clean, reliable, and affordable electricity across Florida. 

Results in Detail 

NextEra Energy reported Q4 adjusted earnings of $0.41 per share, inching past both the Street estimates and prior-year quarter’s earnings of $0.40 per share. 

Additionally, operating revenue advanced 14.8% to $5.05 billion, but missed analysts’ expectations of $6.26 billion. 

The Florida Power & Light company, including Gulf Power, serves more than 5.7 million customer accounts. It supports over 11 million residents across Florida, and is the largest vertically integrated rate-regulated electric utility in the U.S. The segment (excluding Gulf Power) reported operating revenues of $3.06 billion, up 7.7% year-over-year. 

Furthermore, revenues at Gulf Power recorded a rise of 9.9% to $366 million, while revenues at NEER came in at $1.63 billion, up 31.3%. 

Full-Year 2021 Results 

For 2021, NextEra Energy reported adjusted earnings of $2.55 per share, up 10.4% year-over-year. Meanwhile, operating revenues declined 5.3% to $17.1 billion. 

The year 2021 was the best in the history of NEER for origination, adding approximately 7,200 net MW of new renewables and battery storage projects to its backlog. 

Outlook 

CEO Jim Robo said, “Based on the continued strength of the investment opportunities at both Florida Power & Light and NextEra Energy Resources, today we are announcing an increase to our adjusted earnings per share expectations for 2022 and 2023 and introducing expectations for 2024 and 2025.” 

For 2022, the company expects adjusted earnings per share in the range of $2.75 to $2.85, up from prior expectations of $2.55 to $2.75 per share. 

For 2023 through 2025, NextEra Energy expects to grow about 6% to 8% per year over the expected 2022 adjusted earnings per share. 

Analysts’ Recommendations

Yesterday, Evercore ISI analyst Greg Gordon maintained a Hold rating on NextEra, but lifted the price target to $90 (19.84% upside potential) from $78. 

The rest of the Street is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 7 Buys and 3 Holds. The average NextEra price target of $93.80 implies 24.9% upside potential. Shares have lost 4.5% over the past year.   

Smart Score 

NextEra scores a “Perfect 10” from TipRanks’ Smart Score rating system. This makes it one of TipRanks’ Top Stocks and implies that the stock has strong potential to outperform market expectations. 

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