Income Investor: NextEra Excels In Wind, Solar

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Florida utilityNextEra Energy ( NEE ) is living up to its name.

In Tuesday's report on fourth-quarter and full-year results, the Juno Beach, Fla.-based company announced it added 374 megawatts of wind-generated power capacity and 280 MW of solar power to its portfolio.

Granted, those figures are not gigantic. But they represent significant change in sources used to produce electricity in one of the most populated states within the world's No. 1 economy. In fact, the company signed 1,100 MW worth of wind-energy contracts in 2013, breaking through the 1-gigawatt milestone.

In the fourth quarter, adjusted earnings slipped 8% to 95 cents a share, breaking a four-quarter growth streak, despite an 8% bump upward in revenue to $3.63 billion. Profit margins suffered, as after-tax margin decreased by 140 basis points to 11.4% from the year-ago period. NextEra cited spending on a new productivity initiative as the key factor.

The company is investing. Last year, at its Florida Power & Light unit, it completed upgrades of its Cape Canaveral facility. CEO James Robo also cited spending on improvements to strengthen facility defense against bad weather and improve its electric grid.

NextEra's sober 59 Earnings Per Share Rating masks solid future earnings estimates. Wall Street sees earnings up 7% in 2014 and up 6% in 2015. Also, a 6% rise in 2013 revenue halted several years of bleeding numbers.

The high long-term debt-to-equity ratio of 144% is a concern; however, the three-year earnings stability factor is solid at 2 on a scale of zero to 99. The five-year stability factor is also 2. Plus, operating cash flow per share has exceeded EPS every year going back to 1996.

The stock Thursday cleared a 12-week base, rising past an 89.85 buy point.

The 3% annualized dividend yield is superior to that of the S&P 500 and continues to grow. NextEra also hosts a B SMR Rating.



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.



This article appears in: Personal Finance , Investing Ideas

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