NextEra Outperforms Industry Quarter to Date: How to Play the Stock?

Shares of NextEra Energy NEE have gained 2.1% in the quarter-to-date period compared with the Zacks Utility - Electric Power industry’s rally of 1.8%.

NextEra Energy’s solid operational performance and expanding customer base are driving higher demand for its services. The decline in interest rates and the possibility of further decline in the last quarter of 2025 are expected to lower capital costs and enhance growth prospects for this capital-intensive business.

Other companies operating in the utility space, like Duke Energy DUK and The Southern Company SO, have gained 2.5% and 0.1%, respectively, in the quarter-to-date period.

Price Performance (QTD)

Should you consider adding NEE to your portfolio only based on positive 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.

Factors Acting as Tailwinds for NEE Stock

NextEra Energy is firmly focused on long-term clean energy growth. Its subsidiary, Energy Resources, targets the addition of 36.5-46.5 gigawatts (“GW”) of renewable capacity between 2024 and 2027 through strategic projects. From 2025 to 2029, the unit plans to invest $25 billion to further enhance and expand its operations. With nearly 30 GW of signed contracts in its backlog, NextEra Energy Resources enjoys strong visibility into the sustained expansion of its clean energy portfolio.

NextEra Energy, through its regulated utility Florida Power & Light (“FPL”), operates an extensive transmission and distribution (T&D) network of nearly 91,000 circuit miles and 921 substations, supporting grid reliability and renewable integration. The company plans to invest $21.68 billion between 2025 and 2029 to expand and modernize its T&D infrastructure. These upgrades, which include weather hardening, smart-grid deployment, and capacity expansion, position FPL to meet rising power demand fueled by Florida’s population growth and the development of energy-intensive industries like data centers.

NextEra Energy’s balanced generation portfolio underpins its sustainable long-term growth, strengthened by its global leadership in wind and solar. The company continues to broaden its renewable presence while locking in long-term contracts that provide steady cash flows. In 2024, Florida Power & Light generated 69% of its power from natural gas, 20% from solar, 10% from nuclear and 1% from other sources. Meanwhile, Energy Resources derived 64% of its output from wind, 17% from nuclear, 15% from solar and 4% from other sources.

NextEra Energy, through FPL, has secured a strong foothold in Florida’s utility sector, backed by long-term franchise agreements with municipalities and counties. Spanning up to 30 years and extending through 2054, these agreements grant FPL exclusive rights to serve customers and access public rights-of-way in return for franchise fees. Encompassing the vast majority of FPL’s retail base, they create a stable foundation for infrastructure investment, strategic planning, and dependable service delivery.

NextEra Energy’s Earnings Estimates Moving Up

NextEra Energy expects its 2025 earnings per share in the range of $3.45-$3.70 compared with $3.43 a year ago. The Zacks Consensus Estimate for NEE’s 2025 and 2026 earnings per share indicates year-over-year growth of 7.29% and 7.95%, respectively. It expects to increase its earnings per share in the range of 6-8% annually through 2027 from the 2024 level.

The Zacks Consensus Estimate for SO’s 2025 and 2026 earnings per share indicates year-over-year growth of 5.68% and 7.36%, respectively.

NextEra Energy Stock Returns Higher Than its Industry

Return on Equity (ROE) shows how effectively a company’s management is utilizing investors’ money to generate returns. The ROE of the company is better than its industry. The current ROE of the company is 12.31% compared with its industry’s 10.14X.

Duke Energy’s ROE is 9.85%, which is lower than the industry average, indicating that the company uses shareholders’ equity less efficiently than its peers to generate profits.

NextEra Energy’s Capital Return Plans

NextEra Energy plans to increase the dividend rate annually by 10%, at least through 2026, from the 2024 base, subject to its board’s approval. The current annual dividend of the company is $2.27 per share, and the dividend yield of 3.16% is better than the Zacks S&P 500 Composite’s yield of 1.49%.
 
NextEra Energy has increased its dividend five times in the last five years. Check NEE’s dividend history here.

NextEra Energy’s Shares Trading at a Premium

The company is currently valued at a premium compared to its industry on a forward 12-month P/E basis. NextEra Energy is currently trading at 18.28X compared with the industry average of 14.63X.

Summing Up

NextEra Energy maintains steady performance, supported by growing demand for clean energy across its service areas. The company’s broad transmission and distribution infrastructure, economies of scale in renewables, and diverse generation portfolio continue to boost its earnings.

NextEra Energy’s stable ROE and rising earnings estimates make it attractive. It will be wise to remain invested in this Zacks Rank #3 (Hold) stock, enjoy regular dividend payments and look for a better entry point later.

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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