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Is NextEra Energy Overvalued After Its 18% 1-Month Surge?
Yahoo Finance· 2025-10-15 10:05
Core Insights - NextEra Energy has experienced an 18% gain over the past month, outperforming the S&P 500's 1% increase and the Utilities Select Sector SPDR Fund's 8% rise, marking its best one-month performance since June 2024 [1][6] - NextEra Energy is the largest utility company by market capitalization, valued at $172 billion, which is nearly 50% larger than its closest competitor, Constellation Energy, valued at approximately $115 billion [2] - Despite recent gains, NextEra has lagged behind the utility sector and broader market over various time frames, ranking 18th out of 31 utility sector members with a 19% year-to-date gain and 25th out of 31 with a 24% return over the past five years [3] Financial Performance - NextEra's five-year return has been largely driven by dividends, which have increased annually since 2006, resulting in a current dividend yield of 2.7%, slightly above the utility sector's average yield of 2.5% [4] - The company's forward price-to-earnings ratio stands at 23.5, the sixth-highest among 31 utility stocks, while its price-to-sales ratio of 9.1 makes it the most expensive in that regard [5] Market Position - Following a period of underperformance, NextEra's recent rally has attracted investor interest, particularly from those seeking growth and income, although it is not the cheapest utility stock available [6]