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3 Things to Watch When NextEra Energy Reports Q1 Results

By Matthew DiLallo – Apr 22, 2019 at 9:32AM

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The clean-energy-focused utility expects to unveil its first-quarter results on Tuesday morning.

NextEra Energy (NEE -1.23%) is coming off a strong year. The utility expanded earnings by 15% in 2018, fueled by its efforts to build clean power generating assets and natural gas pipelines. The company expects continued growth in 2019, powered by additional investments in renewables as well as some acquisitions it closed last year. That anticipated earnings growth is one of a few things investors should keep an eye on when the utility reports its first-quarter results this week.

1. See if earnings remain on track with guidance

NextEra generated $7.70 per share of adjusted earnings last year. The company sees that number rising to between $8 and $8.50 per share in 2019, a 7.1% increase at the midpoint. That would keep the company on pace to achieve its target of growing adjusted earnings per share at a 6% to 8% compound annual rate through at least 2021.

A person with a laptop inspecting wind turbines.

Image source: Getty Images.

Given that guidance, investors should see if the company's first-quarter results kept it on track to achieve its full-year forecast. Investors should look for any negative impacts during the quarter such as issues with the weather or unexpected downtime at a major power plant. A concern would be if a longer-term problem emerged that could derail its ability to achieve its earnings forecast.

2. Check the progress of its expansion backlog

NextEra's energy resources division added 6,500 MW of renewable projects to its backlog last year. That was more than double 2017's level, which was a record year for the company. The power generating company also commissioned 2,700 MW of new assets last year, which should help drive earnings growth in 2019.

The company has already announced several projects this year, including two large-scale energy storage systems. Ideally, it will have added other smaller projects to the backlog so that it can maintain its fast-paced growth well beyond 2021.

In addition to checking out future growth, investors should look for progress on the company's major projects. Its utility, Florida Power & Light (FPL), for example, is building the state-of-the-art natural-gas-fueled Okeechobee Clean Energy Center, which should begin operations by mid-year. The hope is that this and other projects at FPL remain on time and on budget since that would help keep it on track with its earnings forecast.

3. Look at its progress on integrating recent acquisitions

NextEra Energy completed several acquisitions late last year. In December, the company bought the City of Vero Beach's municipal electric system. Meanwhile, it acquired several assets from Southern Company (SO -1.97%) last year: Gulf Power, Florida City Gas, and two natural gas power plants. Finally, it bought a transmission cable that provides 40% of San Francisco's daily electricity needs.

Of the assets it acquired, the transaction with Southern Company is the one to watch closest. That's because NextEra sees the deal boosting earnings by $0.15 per share in 2020 and by another $0.20 per share in 2021. Investors should keep a close eye on the company's progress integrating these assets so that they move the needle as expected.

Watching for continued momentum

NextEra Energy is investing billions of dollars to extend its lead in renewables, which should help power continued earnings growth in 2019. The hope is that nothing happened during the first quarter to derail the company. Instead, the anticipation is that the energy company generated solid earnings, made progress on securing new expansions projects as well as completing existing ones, and is off to a strong start integrating recent acquisitions. If NextEra does all that, it should have the power to continue generating market-beating total returns.

Matthew DiLallo owns shares of NextEra Energy. The Motley Fool recommends NextEra Energy. The Motley Fool has a disclosure policy.

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