NEXTERA ENERGY INC (NEE) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:NEE - US65339F1012 - Common Stock
87.825 USD
+2.36 (+2.76%)
We assign a fundamental rating of 4 out of 10 to NEE. NEE was compared to 46 industry peers in the Electric Utilities industry. There are concerns on the financial health of NEE while its profitability can be described as average. NEE is valied quite expensively at the moment, while it does show a decent growth rate.
1. Profitability
1.1 Basic Checks
- NEE had positive earnings in the past year.
- NEE had a positive operating cash flow in the past year.
- In the past 5 years NEE has always been profitable.
- Each year in the past 5 years NEE had a positive operating cash flow.
1.2 Ratios
- NEE has a better Return On Assets (3.18%) than 67.39% of its industry peers.
- NEE has a better Return On Equity (12.00%) than 63.04% of its industry peers.
- The Return On Invested Capital of NEE (3.58%) is worse than 67.39% of its industry peers.
- NEE had an Average Return On Invested Capital over the past 3 years of 3.99%. This is in line with the industry average of 4.58%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.18% | ||
| ROE | 12% | ||
| ROIC | 3.58% |
ROA(3y)3.46%
ROA(5y)3.04%
ROE(3y)13.28%
ROE(5y)11.49%
ROIC(3y)3.99%
ROIC(5y)3.59%
1.3 Margins
- Looking at the Profit Margin, with a value of 24.72%, NEE belongs to the top of the industry, outperforming 97.83% of the companies in the same industry.
- NEE's Profit Margin has improved in the last couple of years.
- The Operating Margin of NEE (28.15%) is better than 95.65% of its industry peers.
- In the last couple of years the Operating Margin of NEE has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 28.15% | ||
| PM (TTM) | 24.72% | ||
| GM | N/A |
OM growth 3Y19.72%
OM growth 5Y0.9%
PM growth 3Y10.26%
PM growth 5Y7.41%
GM growth 3YN/A
GM growth 5YN/A
2. Health
2.1 Basic Checks
- The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so NEE is destroying value.
- Compared to 1 year ago, NEE has more shares outstanding
- Compared to 5 years ago, NEE has more shares outstanding
- The debt/assets ratio for NEE is higher compared to a year ago.
2.2 Solvency
- Based on the Altman-Z score of 1.14, we must say that NEE is in the distress zone and has some risk of bankruptcy.
- NEE's Altman-Z score of 1.14 is fine compared to the rest of the industry. NEE outperforms 73.91% of its industry peers.
- The Debt to FCF ratio of NEE is 30.30, which is on the high side as it means it would take NEE, 30.30 years of fcf income to pay off all of its debts.
- With an excellent Debt to FCF ratio value of 30.30, NEE belongs to the best of the industry, outperforming 80.43% of the companies in the same industry.
- A Debt/Equity ratio of 1.65 is on the high side and indicates that NEE has dependencies on debt financing.
- NEE has a Debt to Equity ratio of 1.65. This is in the lower half of the industry: NEE underperforms 60.87% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.65 | ||
| Debt/FCF | 30.3 | ||
| Altman-Z | 1.14 |
ROIC/WACC0.5
WACC7.15%
2.3 Liquidity
- NEE has a Current Ratio of 0.55. This is a bad value and indicates that NEE is not financially healthy enough and could expect problems in meeting its short term obligations.
- Looking at the Current ratio, with a value of 0.55, NEE is doing worse than 86.96% of the companies in the same industry.
- A Quick Ratio of 0.45 indicates that NEE may have some problems paying its short term obligations.
- Looking at the Quick ratio, with a value of 0.45, NEE is doing worse than 82.61% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.55 | ||
| Quick Ratio | 0.45 |
3. Growth
3.1 Past
- NEE shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 8.19%, which is quite good.
- The Earnings Per Share has been growing by 10.36% on average over the past years. This is quite good.
- Looking at the last year, NEE shows a small growth in Revenue. The Revenue has grown by 0.20% in the last year.
- The Revenue has been growing slightly by 5.21% on average over the past years.
EPS 1Y (TTM)8.19%
EPS 3Y10.53%
EPS 5Y10.36%
EPS Q2Q%9.71%
Revenue 1Y (TTM)0.2%
Revenue growth 3Y13.19%
Revenue growth 5Y5.21%
Sales Q2Q%5.27%
3.2 Future
- The Earnings Per Share is expected to grow by 8.28% on average over the next years. This is quite good.
- The Revenue is expected to grow by 8.54% on average over the next years. This is quite good.
EPS Next Y8.55%
EPS Next 2Y8.45%
EPS Next 3Y8.66%
EPS Next 5Y8.28%
Revenue Next Year5.8%
Revenue Next 2Y7.95%
Revenue Next 3Y7.89%
Revenue Next 5Y8.54%
3.3 Evolution
- When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
- The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
- A Price/Earnings ratio of 23.74 indicates a rather expensive valuation of NEE.
- Compared to the rest of the industry, the Price/Earnings ratio of NEE indicates a slightly more expensive valuation: NEE is more expensive than 78.26% of the companies listed in the same industry.
- When comparing the Price/Earnings ratio of NEE to the average of the S&P500 Index (27.25), we can say NEE is valued inline with the index average.
- NEE is valuated rather expensively with a Price/Forward Earnings ratio of 21.77.
- Compared to the rest of the industry, the Price/Forward Earnings ratio of NEE indicates a slightly more expensive valuation: NEE is more expensive than 78.26% of the companies listed in the same industry.
- The average S&P500 Price/Forward Earnings ratio is at 25.98. NEE is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.74 | ||
| Fwd PE | 21.77 |
4.2 Price Multiples
- NEE's Enterprise Value to EBITDA ratio is rather expensive when compared to the industry. NEE is more expensive than 80.43% of the companies in the same industry.
- Based on the Price/Free Cash Flow ratio, NEE is valued a bit cheaper than the industry average as 78.26% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 59.52 | ||
| EV/EBITDA | 18.53 |
4.3 Compensation for Growth
- The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
- The decent profitability rating of NEE may justify a higher PE ratio.
PEG (NY)2.78
PEG (5Y)2.29
EPS Next 2Y8.45%
EPS Next 3Y8.66%
5. Dividend
5.1 Amount
- NEE has a Yearly Dividend Yield of 2.66%.
- NEE's Dividend Yield is slightly below the industry average, which is at 2.90.
- NEE's Dividend Yield is a higher than the S&P500 average which is at 1.82.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.66% |
5.2 History
- The dividend of NEE is nicely growing with an annual growth rate of 10.61%!
- NEE has been paying a dividend for at least 10 years, so it has a reliable track record.
- NEE has decreased its dividend in the last 3 years.
Dividend Growth(5Y)10.61%
Div Incr Years2
Div Non Decr Years2
5.3 Sustainability
- 70.10% of the earnings are spent on dividend by NEE. This is not a sustainable payout ratio.
- NEE's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP70.1%
EPS Next 2Y8.45%
EPS Next 3Y8.66%
NEXTERA ENERGY INC / NEE FAQ
What is the fundamental rating for NEE stock?
ChartMill assigns a fundamental rating of 4 / 10 to NEE.
Can you provide the valuation status for NEXTERA ENERGY INC?
ChartMill assigns a valuation rating of 2 / 10 to NEXTERA ENERGY INC (NEE). This can be considered as Overvalued.
Can you provide the profitability details for NEXTERA ENERGY INC?
NEXTERA ENERGY INC (NEE) has a profitability rating of 6 / 10.
Can you provide the financial health for NEE stock?
The financial health rating of NEXTERA ENERGY INC (NEE) is 2 / 10.
What is the expected EPS growth for NEXTERA ENERGY INC (NEE) stock?
The Earnings per Share (EPS) of NEXTERA ENERGY INC (NEE) is expected to grow by 8.55% in the next year.