NextEra Energy Is Overvalued

Summary:

  • NextEra Energy’s valuation is unjustifiable despite its significant renewable portfolio and $170 billion market cap, making it a poor investment.
  • The company’s 9% YoY improvement and 2.4% dividend yield align it with S&P 500 returns, but don’t justify its P/E ratio in the 20s.
  • Florida Power & Light drives growth, but Florida’s slowing population growth could limit future earnings.
  • NextEra’s 30 GW renewable backlog and 6%-8% earnings growth forecast are promising, but the transition is costly and relies on rate adjustments.

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NextEra Energy, Inc. (NYSE:NEE) is one of the largest US energy companies with a market capitalization of more than $170 billion. The company has one of the largest renewable portfolios of any company and continues to

Peer P/E Market Cap Dividend
American Electric Power 20.6 $54.9 billion 3.4%
Duke Energy 21.3 $89.5 billion 3.6%
NextEra Energy 27.3 $173.1 billion 2.4%
Consolidated Edison 20.1 $35.8 billion 3.2%
PG&E 16.9 $51.0 billion 0.2%


Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.


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