NextEra Energy's Shares Gain 22.7% in a Year: Should You Buy?

Core Viewpoint - NextEra Energy's shares have increased by 22.7% over the past year, outperforming its industry growth of 18.8% and the Zacks Utilities sector, driven by strong company performance and customer growth [1][3]. Group 1: Factors Driving Stock Performance - Improving economic conditions in Florida are benefiting NextEra Energy, with its Florida Power & Light Company (FPL) residential bills being 40% below the national average, providing a competitive edge [3]. - FPL has invested in undergrounding power lines, enhancing service reliability and power distribution infrastructure, which helped avoid 85,000 outages during Hurricane Debby due to smart grid technology [3]. - NextEra Energy Resources is experiencing demand growth through a replacement cycle and new growth cycle, adding over 3,000 megawatts (MW) of renewables and storage projects to its backlog, including 860 MW from agreements with Google [4]. Group 2: Financial Performance and Estimates - NextEra Energy's earnings per share (EPS) for 2024 is projected to be between $3.23 and $3.43, up from $3.17 a year ago, with expected year-over-year growth of 6.94% for 2024 and 8.34% for 2025 [6][7]. - The company has a trailing 12-month return on assets (ROA) of 3.83%, surpassing the industry average of 2.82%, indicating efficient asset utilization [8]. Group 3: Capital Return and Dividend Strategy - NextEra Energy plans to increase its annual dividend rate by 10% at least through 2026, with a current annual dividend of $2.06 per share and a dividend yield of 2.59%, outperforming the S&P 500 Composite's yield of 1.56% [10]. - The company is currently trading at a premium compared to its industry on a forward 12-month P/E basis, reflecting strong market positioning [11]. Group 4: Summary of Competitive Advantage - NextEra Energy's stable performance is supported by rising demand for clean energy, reliable services, and low electricity bills, creating a significant competitive advantage in its service territories [11].