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Earnings Preview For Utilities Powerhouse NextEra Energy

NextEra Energy (NYSE:NEE) reports earnings this coming Friday before the market open. It’s the biggest stock, by far, in the utilities sector with a market cap of $135 (the next highest is just $80 billion). All eyes will be on the data. In terms of price action, the stock has come full-circle from its 52-week highs touched earlier this year before the COVID-19 crash.

NEXTRA Energy Inc Daily Chart

NEXTRA Energy Inc Daily Chart

Source: StockCharts

The stock was above $280, then fell hard to $170 during late March. But here we are – back near the all-time high as an impressive rebound was confirmed on Friday with a 3% advance. NextEra closed at $275.38 in advance of next week’s earnings report.

Taking a step back and a broader look, it’s been a rough earnings season already but also an okay one so far. How can that be?

Well, earnings are set to plummet 44% for the second quarter according to FactSet – the worst since the dreaded fourth quarter of 2008 when S&P 500 earnings fell 69%. Yet the beat-rate, or how corporate earnings per share verifies relative to analyst expectations, is 73% so far – a bit better than the 5-year average. Revenues beats have been even stronger relative to analyst expectations.

Utilities don’t start reporting in earnest until this coming week though, so they have a lot to prove. Expectations are not low either. The market anticipates the utilities sector to have an earnings decline of 0.6% year over year – the best (least bad) among the 11 market sectors.

The market will look to see how COVID-19 impacted sales at NextEra. Was power demand exceptionally soft across the Southeast region? Were renewables deals on the decline? How is the economic outlook according to the company’s managers? These are just some of the key questions we hope to have more color on by the end of the week.

NextEra has a strong track record. Adjusted earnings per share have increased at a rate of 8.4% per year since 2004 while dividends per share have a CAGR of 9.4% in that time. Can they keep it up?

Earnings Preview For Utilities Powerhouse NextEra Energy

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