Will NextEra Energy (NEE) Beat Earnings Estimates in Q2? - Analyst Blog

By Zacks Equity Research,

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NextEra Energy, Inc. ( NEE ) will release its second-quarter 2014 financial results before the opening bell on Jul 29, 2014. In the prior quarter, the utility firm reported a positive earnings surprise of 15.6%. NextEra Energy currently has a Zacks Rank #3 (Hold). Let's see how things are shaping up for this announcement.

Factors to Consider This Quarter

NextEra Energy continues to expand its customer base, primarily on the back of a strengthening Florida economy. An increase in housing permits, a decline in the unemployment rate, creation of new jobs and business expansions all point towards an economy on the rebound in this sunshine state.  

NextEra Energy also continues with its infrastructure modernization program besides adding new facilities to its portfolio. The start-up of the company's two projects -- the Riviera Beach and the Cape Canaveral facilities -- will increase its power generation capacity.

In first-quarter 2014, NextEra Energy generated around $8 million of additional unbilled retail base revenues associated with the hike of retail base rate related to the modernization of the Riviera Beach power plant. The company is expected to collect the annualized retail base rate increase of roughly $234 million from it.  Such favorable rate case decisions and the timely recovery of capital investments encourage the utility to invest in infrastructure projects.

NextEra Energy's operations are nonetheless subject to federal, state and local regulations associated with air, water and other environmental issues. Weather patterns also influence utility earnings. A mild summer in the U.S. is expected to keep energy demand muted.

Earnings Whispers

Our proven model does not conclusively show that NextEra Energy is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here.

Zacks ESP: This is because the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.46, resulting in an ESP of 0.00%.

Zacks Rank #3 (Hold): NextEra Energy's Zacks Rank #3 when combined with a 0.00% ESP makes surprise prediction difficult.  We caution against stocks with a Zacks Rank #4 and #5 going into the earnings release.

Other Stocks to Consider

Here are some utility companies worth considering as our model shows they have the right combination of elements to post an earnings beat this quarter:

Ameren Corp. ( AEE ) has an earnings ESP of +14.04% and carries a Zacks Rank #2 (Buy).

Consolidated Edison, Inc. ( ED ) has an earnings ESP of +9.26% and carries a Zacks Rank #2 (Buy).

TECO Energy, Inc. ( TE ) has an earnings ESP of +3.70% and carries a Zacks Rank #2 (Buy).

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NEXTERA ENERGY (NEE): Free Stock Analysis Report

AMEREN CORP (AEE): Free Stock Analysis Report

TECO ENERGY (TE): Free Stock Analysis Report

CONSOL EDISON (ED): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Stocks: NEE , AEE , TE , ED

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