Utilities aren't the highest growth or most exciting business for investors to follow day-to-day, but that doesn't mean they can't be profitable long-term. The combination of regulated returns and the opportunity to invest in power generating assets around the world can be a profitable combination. 

NextEra Energy (NYSE:NEE) has a lot going for it because its user base in Florida (regulated utility) is growing faster than the rest of the U.S., and it's one of the largest renewable energy owners in the world through NextEra Energy Partners (NYSE:NEP). Both businesses have nice tailwinds that should make this a great utility long-term. Here's a look at where the stock may be headed and whether or not the price is right for NextEra Energy stock. 

Solar farm with a setting sun in the background.

Image source: Getty Images.

Regulated utilities are a growing core

Not all regulated utilities in the U.S. are growing right now. Consumer demand stagnates and renewable energy threatens traditional electricity distribution, but NextEra Energy has a regional advantage that will keep it growing. Florida Power & Light, which is its biggest business, actually saw its contribution to earnings increase $0.26 to $4.81 per share in 2019.

Regulated capital deployed jumped 11% in 2019 to $3.3 billion and total regulated capital deployed is now $36.4 billion. Ultimately, that growing base is what keeps earnings growing for utilities, so Florida's population growth is a tailwind for the energy company

Gulf Power, the company's other utility, is much smaller than Florida Power & Light but still contributed $180 million, or $0.37 per share, in earnings to NextEra Energy. Return on equity for the past twelve months was 10.8%, at the high end of the 9.25% to 11.25% range allowed by regulators. 

The regulated core is both highly profitable and continuing to grow for NextEra Energy, and that's an advantage energy investors should put a value on. 

Power generation and its renewable future

Energy Resources is the power generation side of NextEra Energy's business, and it contributed $3.72 per share in earnings in 2019. On an adjusted basis, earnings per share rose from $3.14 a year ago to $3.49. 

Renewable energy has become the core of the Energy Resources growth, and that continued in 2019. Signed contracts added 5.8 gigawatts (GW) to the renewable energy backlog, and management expects to build 11.5 GW to 18.5 GW of wind, solar, and energy storage assets between 2019 and 2022. 

The other business to pay attention to is NextEra Energy Partners (NYSE:NEP), of which the company owns 60.8% of its operating unit. The company expects to pay a dividend of $2.40 to $2.46 in 2020 with dividend growth of 12% to 15% through 2024. 

Growth is expected to continue

Add up the pieces above, and NextEra Energy has a great core in both regulated and energy generation businesses. Management expects adjusted earnings per share to grow 6% to 8% annually from a base of $8.37 in 2019 through 2022. That may not be a huge rate of growth in other industries, but for an energy utility, it's a strong increase. By 2022, management expects $10.00 to $10.75 per share in earnings. 

But this is where I think the bullish case for NextEra Energy falls apart. It's a rock-solid company and a great energy stock, but with shares trading at 25 times its projected 2022 earnings as I'm writing, that's an expensive stock. Even if I like NextEra Energy's core business better than most utilities, it may be better to keep this one on your radar until you can pick it up for a better valuation.