We reiterate our Neutral recommendation on
NextEra Energy Inc.
(
NEE
). NextEra Energy has been for long a key utility company in the
U.S. energy sector and continues to be an active competitor in the
market, owing to its wide customer base as well as notable
investments in renewable resources.
Recent infrastructure-augmenting projects in wind and solar both
in the U.S. as well as in Canada will likely provide an edge to its
stock portfolio in the future.
However, governments stepping up on environmental standards pose
a serious threat to energy companies, and NextEra is no exception.
With the adoption of stringent federal and environmental
regulations, NextEra's profitability might be adversely affected in
the long run.
Other negatives include sensitivity of the company's earnings to
irregularities in weather patterns, an inability to secure timely
rate increases and risks associated with price volatilities of
energy commodities. NextEra can also be exposed to financial losses
from non-fulfillment of contractual obligations by third
parties.
On the bright side, Florida Power, a unit of NextEra Energy, is
expected to carry on with its supply of clean emission-based
reliable and affordable services to its customers. Moreover, the
company focuses on keeping a strong balance sheet and keeps track
of its growth momentum in investment projects. This is evident from
its solid cash balance which increased by 96% in the first quarter
of 2012.
The company outperformed expectations in the first quarter of
2012 with both earnings and revenue moving ahead of the
corresponding Zacks Consensus Estimates. NextEra Energy projects
earnings for fiscal 2012 in the range of $4.35 to $4.65 per
share.
The Zacks Consensus Estimates for the second quarter and fiscal
2012 are currently pegged at $1.12 per share and $4.52 per share,
respectively.
NextEra Energy presently retains a Zacks #3 Rank, which
translates into a short-term Hold rating. The company's peers
include
Progress Energy Inc.
(
PGN
) and
Teco Energy, Inc.
(
TE
).
Based in Juno Beach, Florida, NextEra Energy Inc., through its
subsidiaries, engages in the generation, transmission, distribution
and sale of electric energy in United States and Canada. The
company is also involved in the generation of renewable energy from
wind and solar projects.
NEXTERA ENERGY (NEE): Free Stock Analysis
Report
PROGRESS ENERGY (PGN): Free Stock Analysis
Report
TECO ENERGY (TE): Free Stock Analysis Report
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