NextEra beats on earnings, reports little impact from COVID-19

Mike Zaccardi, CFA, CMT

NextEra Energy Inc (NEE) reported second quarter 2020 earnings on Friday. NEE is the biggest stock in the utilities sector with a 16.3% weight in the index. The June Beach, Florida firm reported little in the way of negative effects from COVID-19, to the relief of investors.

Despite the good news, the stock finished the day about unchanged, but it was the highest weekly close for NEE in its history. It took less than 6 months for NextEra’s common stock to approach the February peak after dropping nearly 30% earlier this year.

Digging into the numbers, the utility company’s second quarter earnings were $1.28 billion, $2.59 per share. That is a year-on-year increase of more than 13%. On an adjusted-basis, earnings were $2.61 while Wall Street analysts had expected EPS of just $2.50.

On the top-line, revenue actually declined from a year ago and fell well shy of analyst expectation – perhaps that is why the stock finished slightly down on the day. A bottom-line beat with a top-line miss is often a small red flag for investors. But it’s nothing to lose sleep over in this case.

Two of NextEra’s subsidiaries, Florida Power & Light (FPL) and Gulf Power reported strong income gains, and the two are slated to be merged this coming winter.

Investors always look to guidance for a glimpse into the future. Management signaled that 2021 and 2022 adjusted earnings per share should grow in the 6-8% per year range.

Chairman and CEO Jim Robo said, "I will be disappointed if we are not able to deliver financial results at or near the top end of our adjusted earnings per share expectations ranges in 2020, 2021 and 2022."

So it appears COVID-19 won’t be a big deal for the big Southeast utility company despite some of the current hot spots hitting their client-base.

Follow me on Twitter @MikeZaccardi

Chart used with permission from Tradingview.com