NextEra Energy NEE is scheduled to release its first-quarter 2025 results on April 23, before market open. The Zacks Consensus Estimate for earnings is currently pegged at 97 cents per share on revenues of $7.34 billion. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

First-quarter earnings estimates have been revised downward by 2% over the past 60 days. However, the bottom-line projection indicates an increase of 6.59% from the year-ago number. The Zacks Consensus Estimate for quarterly revenues indicates a year-over-year increase of 28.07%.

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NEE Stock’s Earnings Surprise History

NextEra’s earnings beat the Zacks Consensus Estimates in the trailing four quarters, the average surprise being 6.5%.

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What the Zacks Model Unveils

Our proven model predicts a likely earnings beat for NextEra this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an earnings beat. That is the case here, as you can see below.

You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Earnings ESP: NextEra has an Earnings ESP of +2.33%.

Zacks Rank: The company currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Some companies in the same industry with the right combination of the two factors for an earnings surprise this season are Exelon Corporation EXC and Fortis Inc. FTS. EXC and FTS have an Earnings ESP of +1.05% and +1.56%, respectively, and carry a Zacks Rank #2 each. Another utility, Evergy Inc. EVRG, also has the right combination for earnings surprise this season, having an Earnings ESP of +2.59% and a Zacks Rank of 3.

Factors Likely to Have Shaped NEE Stock’s Q1 Earnings

NextEra’s unit, Florida Power & Light Company (“FPL”), is benefiting from the improving economic condition of the state. The strong economic conditions create fresh demand as new customers are added in each quarter. FPL continues to make smart capital expenditures for the benefit of its customers and is keeping its utility bills nearly 40% lower than the national average, which is attracting new customers.

NextEra’s unit, Energy Resources, continues to add new projects to meet customer demand. Energy Resources has more than 25 gigawatts in the backlog of signed contracts, which provides clear visibility into the ongoing expansion of clean power generation. Energy Resources' growth is driven by new additions of renewables and storage facilities in its existing portfolio.

The company has been gaining from and will continue to benefit from rising demand from big data centers and higher demand from oil and gas companies in the Permian Basin region. NextEra has partnered with energy equipment manufacturer GE Vernova to develop gas-fired generation to meet the energy demands of data centers. The company is also focused on deploying low-cost, fast-to-deploy renewables that help to keep power prices down for customers.

NextEra is well-positioned to capitalize on the massive opportunity of expected power demand growth in the United States. NEE's scale, experience, and technology continue to improve as the renewables and storage portfolio grows.

NEE Stock’s Price Performance

NEE shares have gained 0.3% in the past year compared with the industry’s rally of 18.1%.

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NEE Stock Returns Better Than Its Industry

NextEra’s trailing 12-month return on equity (ROE) is 11.85%, ahead of the industry average of 9.77%. ROE is a financial ratio that measures how well a company uses its shareholders’ equity to generate profits. The company's current ROE indicates that it is using shareholders’ funds more efficiently than its peers.

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NextEra’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 is trading at 17.62X compared with its industry’s 14.25X.

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Investment Thesis

NEE’s ability to efficiently manage its expenses enables it to keep its utility bills much lower than the national average, which attracts more customers to its utility services.

The decline in interest rates will act as an added advantage for this capital-intensive industry, but given its premium valuation at present, it is better to hold positions in the stock.

The company continues to gain from improving economic conditions in Florida, which is adding new customers and creating fresh demand for its services. The company’s focus on adding more renewable projects in electricity generation and adding new battery storage in the system will support renewable power generation.

Summing Up

Improving economic conditions in Florida, along with growing clean energy demand from large data centers and increasing needs from the manufacturing and oil & gas sectors, are creating a strong long-term opportunity for NextEra’s low-cost renewable generation units.

Given this rising demand and continued customer growth, staying invested in this utility appears to be a smart choice, as the stock is well-positioned for further growth from current levels.

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This article originally published on Zacks Investment Research (zacks.com).

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