What happened
NextEra Energy (NEE 0.34%) reported its first-quarter 2023 earnings yesterday, and its stock has been dropping ever since. The energy company that runs the Florida Power & Light utility, as well as a growing renewable energy subsidiary, had a good start to the year, but investors sold shares anyway. As of 11:15 a.m. ET, NextEra stock is down 3.5%.
So what
The two-day decline has erased about half of the more-than-13% gain the stock experienced since March 1. The move seems to be due more to valuation than the details of NextEra's earnings report. NextEra reported solid results that beat analyst estimates for both revenue and earnings per share. Perhaps more importantly for shareholders was the company's forward-looking expectations, though.
Image source: Getty Images.
Now what
NextEra CEO John Ketchum stated, "Following a year of strong financial results, NextEra Energy is off to a solid start in 2023, delivering strong first-quarter adjusted earnings-per-share growth of approximately 13.5% year over year."
The company expects adjusted earnings per share to continue to grow in 2023 and 2024. Longer term, NextEra sees 6% to 8% annual growth through 2026 from 2024 levels. That growth is coming from both its utility business and its clean energy business, NextEra Energy Resources. The company expects to also increase its dividend about 10% annually through at least 2024.
The company has attracted investors with both the stability of a utility and a growing renewables business. That has resulted in a lofty valuation for a utility with a price-to-earnings ratio of over 25 based on estimates for this year's earnings. But for longer-term investors, the shares won't look expensive if the company achieves its earnings targets in the coming years.
