Shares of NextEra Energy NEE have gained 5.2% in the past month, lagging the Zacks Utility - Electric Power industry’s rally of 5.8%. However, the company has outperformed the Zacks Utilities sector and the S&P 500’s return in the same time frame.
NextEra Energy’s recent choppiness in share price stems from concern of its massive long-term capital expenditure plan and share dilution that will result from the proposed acquisition of Dominion Energy. Yet, rising electricity demand from data centers, AI applications and ongoing electrification, coupled with rising corporate demand for clean energy, creates a strong long-term growth opportunity for the company.
Price Performance (One Month)
Another utility, The Southern Company SO, is also making systematic investments in expanding its clean energy generation portfolio. The company plans to invest more than $80 billion over the next five-year period to strengthen its operations. The Southern Company’s shares have gained 7.4% over the past month.
Should you consider adding NEE to your portfolio only based on recent softness in share price movements? Let’s delve deeper and find out the factors that can help investors decide whether it is a good entry point to add the stock to their portfolio.
NEE Stock’s Tailwinds Despite Recent Softness in Price
NextEra Energy's long-term growth strategy is anchored by the planned capital investment of more than $94.1 billion through 2030 across its Florida Power & Light (“FPL”) and Energy Resources businesses. At FPL, these investments will expand generation capacity, modernize grid infrastructure and enhance system reliability to meet Florida's growing electricity demand. The expanding regulated rate base is expected to drive consistent earnings and cash flow growth.
NextEra Energy’s unit Energy Resources continues to strengthen its renewable energy platform through sustained investments in clean-energy projects. The company expects to add approximately 76.6-107.6 gigawatts (GWs) of renewable generation capacity between 2026 and 2032 and currently maintains a renewable development backlog of more than 33 GWs, providing strong visibility into its long-term growth pipeline.
A strong Florida economy continues to create attractive growth opportunities for NextEra Energy by fueling rising electricity demand. The company is well positioned to capitalize on this trend through ongoing investments in infrastructure expansion and grid modernization. Moreover, Florida Power & Light's residential electricity rates remain significantly below the national average, supporting customer growth, retention and long-term earnings expansion.
NextEra Energy also benefits from one of the utility industry's lowest-cost operating structures, supported by operational excellence, the scale of its renewable energy portfolio and strategically located assets. These advantages enhance profit margins, reinforce its competitive position and support sustainable long-term growth.
NextEra Energy’s Earnings Estimates Moving North
The Zacks Consensus Estimate for NEE’s 2026 and 2027 earnings per share indicates a year-over-year increase of 8.09% and 8.68%, respectively.
The same for SO’s 2026 and 2027 earnings per share indicates a year-over-year increase of 6.51% and 7.53%, respectively.
NextEra Energy’s Earnings Surprise
NextEra Energy’s earnings beat estimates in each of the last four quarters, resulting in an average surprise of 6.18%.
NextEra Energy Increases Shareholders Value
NextEra Energy has authorization in place to repurchase as many as 180 million shares over an unspecified duration. The company also aims to increase its dividend by nearly 10% annually through at least 2026, followed by approximately 6% yearly growth from the end of 2026 through 2028, pending board approval.
NEE’s current quarterly dividend is 62.32 cents per share, while the dividend yield of 2.82% remains higher than 1.38% of the S&P 500 composite.
Another utility, Duke Energy Corporation DUK, is also making smart capital investments to expand its clean energy generation assets. The current dividend yield of DUK is 3.29% better than its industry and the S&P 500 level.
NEE Stock Returns Better Than Its Industry
Return on equity (“ROE”) is a financial ratio that measures how well a company uses its shareholders’ equity to generate profits. The current ROE of the company indicates that it is using shareholders’ funds more efficiently than peers.
NextEra Energy’s trailing 12-month ROE is 12.25%, ahead of the industry average of 11.21%.
Duke Energy’s ROE is currently pegged at 9.73% lower than the industry level.
NextEra Energy’s Shares Trading at a Premium
The company is currently valued at a premium compared with its industry on a forward 12-month P/E basis. NextEra Energy is currently trading at 21.1X compared with the industry average of 15.86X.
Summing Up
NextEra Energy continues to deliver steady operational and financial performance, supported by growing demand for clean energy across its service territories. The company is strategically expanding its clean energy portfolio to address this increasing demand, while Florida's robust economic growth is creating additional opportunities to expand the regulated utility business.
Given the recent softness in share price, investors can still consider adding NextEra Energy in their portfolio for potential long-term gains as the stock currently has a Zacks Rank #2 (Buy) with rising earnings estimates and strong ROE distributes a stable dividend for its shareholders.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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