Why NextEra Energy Stock Surged Thursday Morning

Shares of NextEra Energy (NYSE: NEE) rose 4.1% in early morning trading on Thursday after the utility and renewable energy company exceeded its own adjusted earnings-per-share (EPS) estimates for 2023. NextEra Energy now says it is well positioned for 2024 and expects to hit the top end of its adjusted EPS guidance through 2026.

Strong earnings growth despite challenges

NextEra Energy earned adjusted EPS of $3.17 a share in 2023, which was up 9% from 2022 and surpassed management's expectations despite a challenging business environment. Key challenges included rising interest rates, higher inflation, and supply issues, particularly in solar.

Both of NextEra Energy's businesses -- Florida Power & Light (FPL), which is also the largest electric utility in America, and renewable energy arm NextEra Energy Resources -- grew strongly in the fourth quarter and 2023. Driven by spending worth nearly $9.4 billion on its infrastructure, FPL's earnings surged 20% last year. In Q4, FPL's average customer base increased by 81,000 year over year.

NextEra Energy Resources' EPS shot up to $1.75 per share in 2023 from only $0.14 a share in 2022. 2023 was a record year, with NextEra Energy Resources adding nearly 9 gigawatts of new renewables and battery storage projects to its backlog.

NextEra Energy stock is an attractive buy

On its fourth-quarterearnings conference calltoday, NextEra Energy's management acknowledged the stock's poor performance of late and said it remains focused on "execution and creating long-term value for shareholders." The company has already outlined financial goals through 2026. This year, for example, it expects to grow its adjusted EPS by 2% to 8%. For 2025 and 2026, it foresees 6% to 8% growth off its 2024 adjusted EPS range.

Above all, NextEra Energy is confident it will grow its dividend by at least 10% this year. A roughly 10% dividend raise from a stock that is yielding 3.3% and is still down about 32% in one year sounds enticing and explains why the stock rose today.

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Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends NextEra Energy. The Motley Fool has a disclosure policy.

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


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