NextEra Energy Earnings: Strong Quarter Highlights Long-Term Growth Potential

We are maintaining our $82 per share NextEra NEE fair value estimate after the company reported first-quarter operating earnings per share of $0.84, up from $0.74 in the same year-ago quarter. Management reaffirmed its 2023 EPS guidance of $2.98-$3.13, in line with our estimate, and the company’s 6%-8% earnings growth expectations through 2026, which we expect the company to achieve the high end of the range.

With the stock up over 13% from its March low, NextEra now trades in line with our fair value estimate. Our narrow economic moat and stable moat trend ratings remain unchanged.

At FP&L, regulatory capital grew 11.2% to $59.2 billion, a growth rate consistent with the previous quarter. The utility recently filed its 10-year site plan with regulators, which plans for 20 gigawatts of solar across its service territory by 2032. Solar generation would account for 35% of energy delivery in 2032, up from just 5% in 2022, combined with 2 gigawatts of battery storage installation. The plan highlights the long runway of growth opportunities at the utility, which we factor into our long-term growth rate. No new material information was disclosed into potential campaign finance violations, though it continues to present potential regulatory risk, which we incorporate into our medium uncertainty rating.

NextEra Energy Resources added over 2 gigawatts to its backlog, predominantly solar and battery storage. The unit now has 20.4 gigawatts in its backlog, supporting our expectations for the company to achieve the unit’s 32.7 to 41.8 gigawatts of development. A recent execution of a memorandum of understanding for a joint venture to incorporate green energy into CF Industries ammonia production highlights the long-term growth opportunities hydrogen presents for NextEra. The unit recently closed on its acquisition of landfill gas-to-electric facilities.