NextEra Energy Inc. (NYSE: NEE) is another somewhat non-cyclical company poised to deliver a positive earnings surprise as it did for the year’s first two quarters.
In Q2, the electricity provider had one of its best bottom line performances in years as EPS grew 14% and that was despite a 44% surge in natural gas expenses. Gas prices spiked in August before falling the rest of the quarter, so it’ll be interesting to see how much NextEra’s key energy generation input weighs on profits.
On the demand side of the equation, consumers’ pain is NextEra’s gain. The company’s four-year rate plan became effective this year and is slated to raise the average residential customer bill by about 3% annually through 2025. While the pace of rate hikes remains below the national average, it should benefit the former Florida Power & Light’s revenues and growth investment.
A leader in renewable energy generation, NextEra plans to devote much of its profits to wind, solar, and infrastructure projects. By the end of 2025, management plans to triple its renewables and storage capacity. Progress in this regard would alleviate its nearly 20,000-megawatt backlog.
In the near term, much work lies ahead to repair damage from the Hurricane Ian tragedy in its home state. But since these headwinds will mostly impact Q4 results, look for the Q3 report to provide some relief for the stock’s recent downtrend.