NextEra Energy Posts Mixed Numbers - Analyst Blog

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NextEra Energy Inc . ( NEE ) announced second-quarter 2012 operating earnings of $1.26 per share, 8 cents higher than the year-ago quarter. Earnings results beat the Zacks Consensus Estimate of $1.16 per share.

The earnings outperformed on the back of marked investments in the company's Florida Power and Lightning business and continued customer growth.

NextEra Energy reported GAAP earnings of $1.45 per share for the second quarter of 2012 compared with $1.38 per share in the year-ago period.

The difference of 19 cents between operating and GAAP earnings, during the second quarter, was due to mark-to-market gains from non-qualifying hedges and other than temporary impairments.

Total Revenue

NextEra Energy's total operating revenue for second-quarter 2012 was $3,667 million, down 7.4% from $3,961 million reported in the year-ago period. This is on account of lower contribution from wind assets and uncertainty regarding rate cases filed by Florida Power.

Reported quarter revenue fell short of the Zacks Consensus Estimate of $3,904 million.

Segment Results

Florida Power & Light (FPL): Revenue recorded an 8% decline to $2,580 million from $2,801 million in second-quarter 2011.The lower revenue in the second quarter was the result of weak energy prices and rate case risk.

NextEra Energy Resources : Total revenue for second-quarter was $1,030 million versus $ 1,105 million in second-quarter 2011, reflecting a drop of 6.7%.The revenue downturn was caused by unfavorable performance by the NextEra's wind resources.

Corporate and Other : Total revenue for second-quarter was $57 million, up 3.6% year over year.

Operational Update

Total operating expenses during the quarter decreased by 13.3% to $2,645 million from $3,054 million in the year-ago quarter. Operating expenses declined as cost of fuel and power purchase shrank by 20.6% to $1,236 million from $1,557 million in the prior-year quarter. This was partially offset by a 3.1% rise in operations and maintenance expenses.

Total operating income in the second quarter of 2012 was $1,022 million in contrast to $907 million in the year-ago quarter, reflecting a 12.6% increase.

Interest expenses in the second quarter swelled by 5.4% to $270 million from $256 million at the end of the second quarter 2011.

Financial Update

Cash and cash equivalents as of June 30, 2012 were $295 million, down from $377 million as of December 31, 2011.

Long-term debts of the company as of June 30, 2012, were $21,580 million versus $20,810 million as of December 31, 2011.

Outlook

NextEra Energy reaffirmed its earnings expectation for 2012 in the range of $4.35 to $4.65 per share. Similarly, the company maintained its adjusted earnings estimates for 2014 in the range of $5.05 to $5.65 per share.

Peer Comparison

Teco Energy Inc . ( TE ), which competes with NextEra Energy Inc., is expected to webcast its second quarter earnings before the market opens on August 2, 2012. The Zacks Consensus Estimates for its second quarter and 2012 earnings are currently pegged at 37 cents and $1.33 per share, respectively.

Our View

NextEra Energy Inc. continued to ride high on its earnings outcome in the second quarter of 2012 and is expected to retain this impressive performance due to its persistent capital investment efforts to provide zero-emission services and enhance customer benefits.

We believe that the company is in a strong position in relation to green energy. A NextEra business wing for green energy is anticipated. It will provide stimulus for growth through its involvement in various wind generation programs.

NextEra has held on to its original strength in wind capacity generation at 1,900 megawatts in US and Canada during both quarters of 2012. This will certainly attract investor confidence in the company's stock in the long run and further add to company's profitability.

Fluctuating power prices and possibility of negative rate case outcome for FPl could hurt NextEra's growth opportunities.

Based in Juno Beach, Florida, NextEra Energy Inc. through its subsidiaries engages in the generation, transmission, distribution and sale of electric energy in Florida.

NextEra Energy currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We have a Neutral recommendation over the long term.


 
NEXTERA ENERGY (NEE): Free Stock Analysis Report
 
TECO ENERGY (TE): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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Referenced Stocks: NEE , TE

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