Market Capitalization $58.9 Billion

Transcription

1 BUY HOLD SELL A+ A A- B+ B B- C+ C C- D+ D D- E+ E E- F Annual Dividend Rate BUY BUY RATING SINCE 08/16/2010 TARGET PRICE $ BUSINESS DESCRIPTION NextEra Energy, Inc., through its subsidiaries, generates, transmits, and distributes electric energy in the United States and Canada. The company generates electricity from gas, oil, solar, coal, petroleum coke, nuclear, and wind sources. STOCK PERFORMANCE (%) 3 Mo. 1 Yr. 3 Yr (Ann) Price Change GROWTH (%) Last Qtr 12 Mo. 3 Yr CAGR Revenues Net Income EPS Sector: Utilities: Non-telecom Sub-Industry: Electric Utilities Source: S&P Weekly Price: (US$) SMA (50) SMA (100) 1 Year 2 Years Rating History BUY TARGET PRICE $ RETURN ON EQUITY (%) Ind Avg S&P 500 Q Q Q P/E COMPARISON Volume in Millions COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History RECOMMENDATION We rate () a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income Ind Avg S&P 500 HIGHLIGHTS 43.47% is the gross profit margin for which we consider to be. It has increased from the same quarter the previous year. Along with this, the net profit margin of 14.15% is above that of the industry average. EPS ANALYSIS¹ ($) Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year. Q Q Q Q Q Q Q NA = not available NM = not meaningful Q Q Q Compustat fiscal year convention is used for all fundamental data items. 's earnings per share declined by 27.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, increased its bottom line by earning $6.07 versus $5.60 in the prior year. This year, the market expects an improvement in earnings ($6.20 versus $6.07)., with its decline in revenue, slightly underperformed the industry average of 6.2%. Since the same quarter one year prior, revenues fell by 12.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share. Net operating cash flow has declined marginally to $1, million or 1.59% when compared to the same quarter last year. Despite a decrease in cash flow of 1.59%, is in line with the industry average cash flow growth rate of -5.29%. PAGE 1

2 PEER GROUP ANALYSIS REVENUE GROWTH AND EBITDA MARGIN* Revenue Growth (TTM) -14% -2% EXC UNFAVORABLE 20% PCG XEL EBITDA Margin (TTM) ES EIX AEP DUK SO FAVORABLE PPL 55% Companies with higher EBITDA margins and revenue growth rates are outperforming companies with lower EBITDA margins and revenue growth rates. Companies for this scatter plot have a market capitalization between $17.9 Billion and. Companies with NA or NM values do not appear. *EBITDA Earnings Before Interest, Taxes, Depreciation and Amortization. REVENUE GROWTH AND EARNINGS YIELD Revenue Growth (TTM) -14% -2% DUK SO AEP PCG EXC XEL PPL UNFAVORABLE 0% ES EIX Earnings Yield (TTM) KEP FAVORABLE 40% Companies that exhibit both a high earnings yield and high revenue growth are generally more attractive than companies with low revenue growth and low earnings yield. Companies for this scatter plot have revenue growth rates between -12.2% and -2.5%. Companies with NA or NM values do not appear. INDUSTRY ANALYSIS The US electric utilities industry is comprised of companies that produce and distribute electricity. Companies include investor-owned utilities, municipal utilities, cooperatives, federally owned utilities, independent power producers and independent transmission companies. These firms perform three distinct functions: generation, distribution and transmission. The electric power generation industry includes 2,200 power generating plants with combined revenue of $80 billion. Major players are Duke Energy (DUK), Exelon (EXC), American Electric Power (AEP) and Southern Co (SO). Total US electricity generation exceeds 4 million gigawatt-hours (GWh) per year. Coal, nuclear energy, and natural gas are primary fuels used for generation and account for almost 90% of total production. Coal electricity generation accounts for almost 50%, nuclear energy accounts for roughly 20%, and natural gas accounts for about another 20% of total generation. Hydropower supply and other renewable resources such as geothermal, solar, and wind account for the balance of production. Wind energy, which is clean, secure and sustainable, has the potential to play an increasingly important role. United States electricity consumption will continue to increase due to population growth, economic expansion and proliferation of electrical devices. U.S. electricity consumption is expected to increase by 40% or more in the next 20 years. In response to rising fuel costs, retail electricity prices have risen. Average US residential electricity prices are estimated to increase by 5% to 10% annually. Increase in energy and purchased power costs are accentuating profitability pressures within the industry. Increased focus on maintaining and enhancing profitability has pushed utilities, cooperatives and municipalities to improve cost-related efficiencies. The industry has witnessed growing reliance on outsourcing the maintenance and improvement of distribution and transmission systems to third-party service providers. This helps reduce overhead and overall costs and also helps utilities to focus on core business activities with a smaller workforce. Looking ahead, electricity demand may flatten out due to conservation efforts or rise modestly with the shift toward more mobile electronic devices & transportation vehicles. Consequently, there is considerable uncertainty regarding resource availability and increased deployment of renewable sources will be a key challenge. New generating capacity, environmental legislation and technological hurdles add to worries. The industry s response in the next few years will define future growth expectations. PEER GROUP: Electric Utilities Recent Market Price/ Net Sales Net Income Ticker Company Name Price ($) Cap ($M) Earnings TTM ($M) TTM ($M) , , , DUK DUKE ENERGY CORP , , , SO SOUTHERN CO , , , KEP KEPCO-KOREA ELEC POWER CORP , , , AEP AMERICAN ELECTRIC POWER CO , , , PCG PG&E CORP , , EXC EXELON CORP , , , EIX EDISON INTERNATIONAL , , , PPL PPL CORP , , , XEL XCEL ENERGY INC , , , ES EVERSOURCE ENERGY , , The peer group comparison is based on Major Electric Utilities companies of comparable size. PAGE 2

3 Annual Dividend Rate COMPANY DESCRIPTION NextEra Energy, Inc., through its subsidiaries, generates, transmits, and distributes electric energy in the United States and Canada. The company generates electricity from gas, oil, solar, coal, petroleum coke, nuclear, and wind sources. As of December 31, 2015, it served approximately 9.5 million people through approximately 4.8 million customer accounts in the east and lower west coasts of Florida. The company had approximately 46,400 megawatts of generating capacity. It also leases fiber-optic network capacity and dark fiber to telephone, wireless, and Internet companies. The company was formerly known as FPL Group, Inc. and changed its name to NextEra Energy, Inc. in NextEra Energy, Inc. was founded in 1984 and is headquartered in Juno Beach, Florida. 700 Universe Boulevard Juno Beach, FL USA Phone: STOCK-AT-A-GLANCE Below is a summary of the major fundamental and technical factors we consider when determining our overall recommendation of shares. It is provided in order to give you a deeper understanding of our rating methodology as well as to paint a more complete picture of a stock's strengths and nesses. It is important to note, however, that these factors only tell part of the story. To gain an even more comprehensive understanding of our stance on the stock, these factors must be assessed in combination with the stock s valuation. Please refer to our Valuation section on page 5 for further information. FACTOR SCORE Growth 4.0 out of 5 stars Measures the growth of both the company's income statement and cash flow. On this factor, has a growth score better than 70% of the stocks we rate. Total Return 4.0 out of 5 stars Measures the historical price movement of the stock. The stock performance of this company has beaten 70% of the companies we cover. Efficiency 3.5 out of 5 stars Measures the strength and historic growth of a company's return on invested capital. The company has generated more income per dollar of capital than 60% of the companies we review. Price volatility 5.0 out of 5 stars Measures the volatility of the company's stock price historically. The stock is less volatile than 90% of the stocks we monitor. Solvency 5.0 out of 5 stars Measures the solvency of the company based on several ratios. The company is more solvent than 90% of the companies we analyze. Income 4.0 out of 5 stars Measures dividend yield and payouts to shareholders. The company's dividend is higher than 70% of the companies we track. THESTREET RATINGS RESEARCH METHODOLOGY TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates. While our model is quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings. Objective elements include volatility of past operating revenues, financial strength, and company cash flows. Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's performance. These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. PAGE 3

4 Consensus EPS Estimates² ($) IBES consensus estimates are provided by Thomson Financial 1.63 Q3 FY E 2016(E) 6.54 E 2017(E) INCOME STATEMENT Net Sales ($mil) 3, , EBITDA ($mil) 1, , EBIT ($mil) , Net Income ($mil) FINANCIAL ANALYSIS 's gross profit margin for the second quarter of its fiscal year 2016 is essentially unchanged when compared to the same period a year ago. Sales and net income have dropped, underperforming the average competitor within its industry. has very liquidity. Currently, the Quick Ratio is which clearly shows a lack of ability to cover short-term cash needs. The company's liquidity has increased from the same period last year. During the same period, stockholders' equity ("net worth") has increased by 8.60% from the same quarter last year. The key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the near future. STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. To learn more visit BALANCE SHEET Cash & Equiv. ($mil) Total Assets ($mil) 85, , Total Debt ($mil) 32, , Equity ($mil) 23, , PROFITABILITY Gross Profit Margin 43.47% 43.43% EBITDA Margin 43.47% 43.42% Operating Margin 24.03% 26.52% Sales Turnover Return on Assets 3.01% 3.76% Return on Equity 11.12% 13.63% DEBT Current Ratio Debt/Capital Interest Expense Interest Coverage SHARE DATA Shares outstanding (mil) Div / share EPS Book value / share Institutional Own % NA NA Avg Daily Volume 1,945,279 1,938,574 2 Sum of quarterly figures may not match annual estimates due to use of median consensus estimates. PAGE 4

5 RATINGS HISTORY Our rating for has not changed since 8/16/2010. As of 8/18/2016, the stock was trading at a price of which is 3.8% below its 52-week high of $ and 35.4% above its 52-week low of $ VALUATION BUY. This stock's P/E ratio indicates a discount compared to an average of for the Electric Utilities industry and a discount compared to the S&P 500 average of Conducting a second comparison, its price-to-book ratio of 2.53 indicates a discount versus the S&P 500 average of 2.83 and a premium versus the industry average of The price-to-sales ratio is well above both the S&P 500 average and the industry average, indicating a premium. 2 Year Chart BUY: $ $130 $120 $110 $100 MOST RECENT RATINGS CHANGES Date Price Action From To 8/18/14 $96.14 No Change Buy Buy Price reflects the closing price as of the date listed, if available RATINGS DEFINITIONS & DISTRIBUTION OF THESTREET RATINGS (as of 8/18/2016) 40.77% Buy - We believe that this stock has the opportunity to appreciate and produce a total return of more than 10% over the next 12 months % Hold - We do not believe this stock offers conclusive evidence to warrant the purchase or sale of shares at this time and that its likelihood of positive total return is roughly in balance with the risk of loss % Sell - We believe that this stock is likely to decline by more than 10% over the next 12 months, with the risk involved too great to compensate for any possible returns. Price/Earnings Peers Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations. is trading at a discount to its peers. Price/Projected Earnings Peers Premium. A higher price-to-projected earnings ratio than its peers can signify a more expensive stock or higher future growth expectations. is trading at a premium to its peers. Price/Book 2.53 Peers 1.89 Premium. A higher price-to-book ratio makes a stock less attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet. is trading at a significant premium to its peers. Price/Sales 3.52 Peers 2.31 Premium. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales. is trading at a significant premium to its industry. Price/CashFlow 9.16 Peers 8.03 Premium. The P/CF ratio, a stock s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures. is trading at a premium to its peers. Price to Earnings/Growth 9.81 Peers 8.57 Premium. The PEG ratio is the stock s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples. trades at a premium to its peers. Earnings Growth lower higher Peers Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios. However, is expected to significantly trail its peers on the basis of its earnings growth rate. Sales Growth lower higher Peers Lower. A sales growth rate that trails the industry implies that a company is losing market share. significantly trails its peers on the basis of sales growth TheStreet Ratings 14 Wall Street, 15th Floor New York, NY Research Contact: Sales Contact: DISCLAIMER: The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided via the COMPUSTAT Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as other third-party data providers. TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a qualified securities professional, before you make any investment. None of the information contained in this report constitutes, or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. Your use of this report is governed by TheStreet, Inc.'s Terms of Use found at PAGE 5