On Sep 19, 2013 we maintained our Neutral recommendation on
NextEra Energy Inc.
). The Florida-based utility service provider currently carries a
Zacks Rank #3 (Hold).
Why the Reiteration?
Asset additions and higher demand from an expanded customer
base led the company to deliver positive earnings surprise in the
second quarter of 2013. The reiteration, however, takes into
consideration the tariff headwind experienced by the company's
solar project in Spain. In addition, continued decline in average
power prices are limiting its growth opportunities.
NextEra Energy's multiple renewable initiatives along with
sizeable long-term wind and solar contracts will propel future
growth. The company recently expanded its operations to Hawaii to
develop underground cable infrastructure connecting the grids
between the islands of Oahu, Maui and the Big Island.
NextEra Energy is also exploring options to increase its
renewable portfolio in Hawaii. Furthermore, visible signs of
recovery in the Florida housing and construction market will help
NextEra Energy to achieve its targeted compound annual earnings
per share growth rate of 5% to 7% over the period 2012 to
In addition, NextEra Energy's strong liquidity position will
finance its ongoing infrastructure development initiatives as
well as capture high-return assets.
Nonetheless, the threat of operational disruption from severe
storms might put the company's operations at risk. Also,
stringent pro-environment regulations might add to cost pressure
thereby impacting margins.
Other Stocks to Consider
Utility players looking good at the moment are Zacks Ranked #2
Integrys Energy Group Inc.
UNS Energy Corp.
PNM Resources Inc.
NEXTERA ENERGY (NEE): Free Stock Analysis
PNM RESOURCES (PNM): Free Stock Analysis
INTEGRYS ENERGY (TEG): Free Stock Analysis
UNS ENERGY CORP (UNS): Free Stock Analysis
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