NextEra Energy NEE announced third-quarter 2015 adjusted earnings of $1.60 per share, lagging the Zacks Consensus Estimate of $1.64 by 2.4%. On a year-over-year basis, earnings climbed 3.2% on the heels of higher revenues from Florida Power & Light Company.
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On a GAAP basis, NextEra Energy recorded third-quarter earnings of $1.93 per share compared with $1.50 per share a year ago. The variance between adjusted and GAAP earnings, during the quarter, was due to 35 cents of unrealized mark-to-market gain from non-qualifying hedges, a 2 cent gain from Spain solar projects, a 3 cent charge from temporary impairments and 1 cent of merger related expenses.
Total Revenue
In the third quarter, NextEra Energy’s operating revenues were $4,954 million, surpassing the Zacks Consensus Estimate by 2.7%. Quarterly revenues increased 6.5% from $4,654 million a year ago.
Segmental Results
Florida Power & Light Company (FPL): In the third quarter, this segment reported revenues of $3,274 million, down 1.2% year over year. Earnings from this segment were $1.07 per share compared with $1.05 per share in the prior-year quarter. The year-over-year growth in earnings came on the back of continued investment in the business.
NextEra Energy Resources (NEER): Revenues from this segment shot up nearly 27.6% to $1,585 million. Earnings were 48 cents per share compared with 52 cents per share in the prior-year quarter. The decline was primarily due to higher interest and corporate expenses.
Corporate and Other: The segment’s quarterly revenues were $95 million, down 2.1% from $97 million a year ago.
Operational Update
In the quarter under review, NextEra Energy’s total operating expenses decreased 0.5% year over year to $3,473 million. The decline in expenses was due to lower fuel, purchased power and interchange expenses.
Operating income escalated nearly 27.4% to $1,481 million from $1,163 million a year ago.
NextEra’s interest expenses in the reported quarter were $311 million, down from $316 million in the prior-year quarter.
Financial Update
NextEra Energy had cash and cash equivalents of $1,181 million as of Sep 30, 2015, compared with $577 million as of Dec 31, 2014.
Long-term debts as of Sep 30, 2015, were $25.6 billion, up from $24.4 billion as of Dec 31, 2014.
NextEra Energy’s cash flow from operating activities in the first nine months of 2015 was $4,513 million compared with $3,968 million in the year-ago period.
Guidance
NextEra reiterated its 2015 earnings guidance of $5.40–$5.70 per share but expects the figure to come in on the upper end of the range. NextEra expects earnings per share to grow at a compound annual growth rate of 6% to 8% per year through 2018, off a 2014 base. Earnings per share are expected in a range of 5.85–$6.35 for 2016 and $6.60–$7.10 for 2018.
Other Releases
American Electric Power Co., Inc. AEP reported third-quarter 2015 operating earnings of $1.06 per share, beating the Zacks Consensus Estimate of $1.00 by 6%.
DTE Energy Company DTE reported third-quarter 2015 operating earnings per share of $1.40, surpassing the Zacks Consensus Estimate of $1.22 by 14.8%.
Our View
NextEra Energy reported mixed results in the third quarter with total revenues coming in ahead of estimates while earnings fell short of the mark. The improving Florida economy is having a positive impact on demand and customer count. At FPL, the company catered to 67,000 more customer accounts during the third quarter of 2015 than in the comparable prior-year quarter.
A higher number of customers served also had a positive impact on total sales. Total energy sales in the reported quarter increased 2.6% year over year to 33.739 million Kwh due to a hike in demand from all customer classes. Consistent investment to strengthen existing operations and the addition of renewable assets are big positives for the company.
During the reported quarter, the company filed a request to the Florida Public Service Commission to lower rates. If the application is approved, it will result in average monthly savings of $2.50 in 2016 from 2015 levels. Even with prices of products and services going up in the past decade, the company’s long-term strategic initiatives have ensured that prices remain at modest levels. The decision to shut down older plants and invest in new state-of-the-art power projects has boosted energy efficiency and helped the company to lower electricity bills.
NextEra Energy currently sports a Zacks Rank #1 (Strong Buy). Eversource Energy ES, sharing the same Zacks rank with NextEra, is expected to release third-quarter earnings after the market closes on Nov 3, 2015. The Zacks Consensus Estimate is at 75 cents.
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Click to get this free report AMER ELEC PWR (AEP): Free Stock Analysis Report NEXTERA ENERGY (NEE): Free Stock Analysis Report DTE ENERGY CO (DTE): Free Stock Analysis Report EVERSOURCE EGY (ES): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research