NextEra (NEE) Higher Cost Low Revenue From Wind Energy Might Impact Earnings
$NextEra(NEE)$ will be reporting their fourth-quarter earnings on 24 Jan 2025 before the market opens. Consensus estimate for the revenues is pegged at $6.49 billion, indicating a decline of 5.62% from the year-ago reported figure.
The consensus estimate for earnings is pegged at 52 cents per share. Consensus Estimate for NEE’s fourth-quarter earnings has declined by 7.3% in the past 60 days. The estimate suggests a year-over-year decline of 1.92%.
NextEra (NEE) Last Earnings Positive Sentiment Yet Lost 17% Till Date
NEE had a negative 17.62% change since its last earnings call on 23 Oct 2024 though the earnings call sentiment is positive.
The third quarter earnings call reflected strong operational and financial performance with record adjusted earnings and significant growth in renewable energy origination. However, challenges such as share price underperformance and lower wind resource impacted results. Despite these issues, the company's future outlook remains optimistic with robust growth strategies in place.
NextEra Energy delivered full year adjusted earnings per share of $3.17, up over 9% from 2022, exceeding the high end of the adjusted EPS expectations range.
NextEra Energy Transmission awarded projects in PJM, CAISO, and SPP, with plans to deploy approximately $1.9 billion of capital through 2027.
NextEra (NEE) Guidance Expect Robust Performance
During the fourth quarter 2024 earnings call for NextEra Energy, Inc. (NEE), the guidance provided highlighted several key metrics and future expectations. The company reported a robust performance with full-year adjusted earnings per share (EPS) of $3.17, marking an over 9% increase from 2022 and surpassing the high end of their EPS expectations.
Despite facing challenges like solar supply chain disruptions and higher inflation, NextEra Energy achieved a compound annual adjusted EPS growth of approximately 11.5% since 2021. Over the past decade, the company has delivered a compound annual growth in adjusted EPS of roughly 10%, leading among the top 10 power companies.
Looking ahead, they maintain a positive outlook for 2024, anticipating that inflation and interest rates will stabilize and new solar supply chains will reduce costs. They also plan to add around 4,800 megawatts of solar capacity and invest $32-$34 billion in capital under the current rate agreement through 2025. Their long-term financial expectations remain unchanged, aiming for financial results at or near the top end of the adjusted EPS expectation ranges for 2024, 2025, and 2026.
NextEra (NEE) Challenges That Might Affect Its Earnings
Wind energy faces many challenges, including rising costs, engineering issues, and environmental concerns.
NEE might continue to see contributions from existing clean energy assets decreased results due to the lowest wind resource on record over the past 30 years. Corporate and Other segment faced higher interest costs, leading to a decrease in adjusted earnings.
So we might not see much improvement in terms of capital costs reducing for the fourth quarter. Supply chain issues and inflation increase the cost of materials.
Technical Analysis - Multi-timeframe
President Trump executive orders halt wind development and declare energy emergency, this has caused the energy stocks to trade downward since 21 Jan.
We are seeing NEE also suffer from this action and it has not recovered after losing 17% since the last earnings call, and though MACD is showing upside movement, MTF is giving a strong downward trend.
So I am expecting another more than 10% decline if NEE revenue from wind resource impacting its overall earnings.
Summary
NEE is in a position where its wind energy earnings might be hampered in the fourth quarter, this is going to make worse as the executive order on energy emergency would further hit the development of the wind energy.
I am expecting NEE to trade lower after its earnings whether there is a better-than-expected results or not.
Appreciate if you could share your thoughts in the comment section whether you think NEE could recover from the challenges with a much positive earnings.
@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.
Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.
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