Morningstar

NextEra Earnings: FP&L and NEER Positioned Well for Accelerating Data Center Demand

We continue to assume management will achieve its target of at least 8% annual earnings growth.

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Securities in This Article
NextEra Energy Inc
(NEE)

Key Morningstar Metrics for NextEra Energy

  • Fair Value Estimate
    : $86.00
  • Morningstar Rating
    : ★★★
  • Morningstar Economic Moat Rating
    : Narrow
  • Morningstar Uncertainty Rating
    : Medium

What We Thought of NextEra Energy’s Earnings

NextEra Energy NEE reported first-quarter operating earnings of $1.09 per share, up from $0.99 in the year-ago period, putting the company on track to meet our full-year expectations.

Why it matters: A 10% increase in consolidated earnings was supported by strong growth at both FP&L and NextEra Energy Resources.

  • FPL’s regulatory capital employed grew 8.8% year over year, with strong renewable energy investments in Florida. Customer additions remained healthy, positioning the company to invest $90 billion-$100 billion through 2032.
  • NEER’s earnings grew 14% from new renewable energy and transmission investments, partially offset by weaker customer supply. Management reaffirmed expectations to bring 44 GW-61 GW online at NEER in 2026-29. We assume it reaches the midpoint. Management reported a 33 GW backlog for NEER, up 4 GW from last quarter.

The bottom line: We are reaffirming our $86 fair value estimate and narrow moat rating for NextEra.

  • NextEra trades at a 10% premium to our fair value estimate as of April 23. We consider the US utilities sector 5% overvalued.
  • We continue to assume management will achieve its target of at least 8% annual earnings growth. Management reaffirmed full-year EPS guidance of $3.92-$4.02, in line with our estimate.

Coming up: We expect NextEra to announce more data center contracts throughout the year. At NEER, we expect management to achieve its 15 GW data center goal, with the potential for up to 35 GW, by 2035. Most of this growth is beyond our near-term forecast.

  • With a new large load tariff approved by Florida regulators, FP&L reported up to 12 GW of long-term data center interest, with at least one project expected to be announced by year-end.
  • NextEra Energy Transmission continues to increase its share of consolidated earnings, given several recent transmission project announcements, positioning the unit to achieve more than 20% annual growth throughout our outlook.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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