NextEra Energy expects Solid Results to be at least near the top of its earnings-per-share expectations over the next three years, CEO John Ketchum said on a conference call with analysts Tuesday.
Solid third-quarter results
The company’s third-quarter earnings beat Wall Street estimates, thanks to higher retail sales in its utilities business and additional projects in its renewable energy units.
Leaders in Wind and Solar Energy
NextEra, which generates more wind and solar power than any other company in the world, benefited from a surge in clean energy investment in the US after the passage of the Inflation Reduction Act last year.
“We will be disappointed if we fail to deliver financial results at or near the expected ranges for adjusted earnings per share in each year through 2026,” said Ketchum.
Florida Power & Light, NextEra’s regulated business subsidiary, added 65,000 more customers than the previous year, indicating higher retail sales due to warmer weather in Florida.
Renewable Energy Expansion
NextEra Energy Resources, its clean energy unit, added nearly 3,245 megawatts of new renewable energy and storage projects, bringing the total to over 21 gigawatts, net of commissioned projects. The company’s new solar installations are at a record level, and new wind power installations are close to a record despite rising interest rates, noted Raymond James analyst Pavel Molchanov.
“We must emphasize that the cost of capital is not the only variable that matters. Material costs have fallen sharply, helping to cancel out the effect of high interest rates,” he said.
Tax credits and future prospects
The parent company announced on its conference call that it expects to transfer nearly $400 million in tax credits this year, rising to around $1.6 to $1.8 billion by 2026.
NextEra Energy (NEE.N) shares rose 6.7% to $54.96. Nextera Energy Partners (NEP.N) gained 13.7% to $25.48, its highest level since October 2. NextEra Energy Partners (NEP.N), a subsidiary of the company set up to acquire, manage and own contracted energy projects, recorded growth in the third quarter mainly thanks to new projects, and was targeting an average annual growth rate of 6%.
A positive outlook
In September, the unit had reduced its forecast from 12-15% to a range of 5-8%. Prior to the release of the results, concerns had been raised that increased competition and higher interest rates could hurt NextEra’s renewables business, said Mike Doyle, utilities analyst at Edward Jones. “We really haven’t seen that in terms of record origination on the renewables side, which has increased their backlog of projects that will be completed in the coming years,” he said.
Utilities also continue to perform well, added Doyle. “We believe they will post some of the best growth among pure utilities over the next few years.”
Forecasts for the future
The Juno Beach, Florida-based company said it expects adjusted earnings per share for 2023 in the range of $2.98 to $3.13, compared with LSEG estimates of $3.12, and $3.23 to $3.43 for 2024, compared with $3.40 according to LSEG data. On an adjusted basis, the company earned 94 cents per share in the quarter, beating estimates by 87 cents, according to LSEG data.
