NextEra Outperforms Industry in Three Months: How to Play the Stock?

Core Viewpoint - NextEra Energy (NEE) has outperformed the Zacks Utility - Electric Power industry, with a 9.2% increase in share price over the last three months compared to the industry's 5.1% [1] Performance Summary - NextEra Energy's share price increase is attributed to solid performance and an expanding customer base, leading to greater demand for its services [1] - The company is trading above its 50-day simple moving average (SMA), indicating a bullish trend [5] Factors Contributing to Performance - The strengthening Florida economy is generating new demand opportunities for NextEra Energy [9] - The company is well-positioned to meet the growing demand for clean electricity through strategic investments in infrastructure [9] - NextEra Energy maintains one of the lowest cost structures in the utility industry, supporting robust profit margins [11] - The company plans to add 36.5 to 46.5 GW of new renewable capacity between 2024 and 2027, with a current renewable project backlog exceeding 28 GW [12] Earnings Performance - NextEra Energy has consistently surpassed earnings per share expectations, with an average earnings surprise of 3.58% over the past four quarters [13] - The company expects its 2025 earnings per share to be in the range of $3.45-$3.70, indicating year-over-year growth of 7.29% and 7.92% for 2025 and 2026, respectively [15] Dividend and Capital Return - NextEra Energy plans to increase its dividend rate annually by 10% at least through 2026, with a current annual dividend of $2.27 per share and a dividend yield of 3% [18] Return on Equity and Valuation - NextEra Energy's return on equity (ROE) is 12.06%, outperforming the industry average of 10.34% [20] - The company is currently valued at a premium on a forward 12-month P/E basis, trading at 19.7X compared to the industry average of 14.91X [23] Overall Outlook - NextEra Energy's performance is supported by growing demand for clean energy, falling interest rates, and efficient operations [26] - Despite its premium valuation, the company maintains stable ROE, rising earnings estimates, and regular dividend payments, making it a viable option for investors [27]