It has been about a month since the last earnings report for NextEra Energy Partners (NEP). Shares have added about 5.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is NextEra Energy Partners due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
NextEra Energy Partners' Q2 Earnings Surpass Estimates
NextEra Energy Partners, LP delivered earnings of 69 cents per unit in the second quarter of 2020, beating the Zacks Consensus Estimate of 50 cents by 38%. Moreover, this outperformance reversed the year-ago quarter’s loss of 49 cents per unit.
In the quarter under review, the firm’s revenues of $253 million missed the Zacks Consensus Estimate of $333 million by 24%. However, the top line improved 15.5% on a year-over-year basis.
Highlights of the Release
In the June quarter, NextEra Energy Partners’ total adjusted operating expenses were $164 million, up 7.9% from the year-ago quarter’s $152 million.
In the same period, the partnership’s operating income summed $89 million, up 32.8% from $67 million in the year-ago quarter.
The firm now expects to achieve long-term distribution growth objectives without any additional acquisition until 2022. Notably, it declared a quarterly distribution of 57.75 cents per unit payable Aug 14 to its unitholders of record as of Aug 6. This makes the annualized distribution of $2.31 per common unit rise nearly 15% on an annualized basis.
NextEra Energy Partners had cash and cash equivalents worth $96 million as of Jun 30, 2020 compared with $128 million as of Dec 31, 2019.
Long-term debt was $4,182 million as of Jun 30, 2020 compared with $4,132 million as of Dec 31, 2019.
Net cash provided by operating activities at the end of the first half of 2020 was $259 million, higher than $130 million at the end of first-half 2019.
For 2020, the firm reaffirmed the run rate for cash available for distribution (CAFD) in the range of $560-$640 million.
The partnership continues to expect 12-15% per year growth for limited partner distributions through 2024. It expects the annualized rate of 2020 distribution in the band of $2.40-$2.46 per common unit.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 15.86% due to these changes.
Currently, NextEra Energy Partners has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, NextEra Energy Partners has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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