NextEra Surges Past Industry Over a Year: How to Play the Stock?

Shares of NextEra Energy NEE have gained 28.7% in the past year compared with the Zacks Utility - Electric Power industry’s rise of 28%. The company has also outperformed the Zacks Utilities sector’s return of 24.3% and the Zacks S&P 500 composite’s rally of 20.1% in the same time frame.

NextEra Energy has seen its share price rise on the back of strong operational performance and a steadily expanding customer base. This continues to drive demand for its services. At the same time, declining interest rates are likely to reduce capital costs, further improving the outlook for this capital-intensive utility.

Price Performance (One year)

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Another utility, The Southern Company SO, is also making systematic investments in expanding its clean energy generation portfolio. The company plans to invest $81 billion over the next five-year period to strengthen its operations. Southern Company’s shares have gained 8.3% over the past year.

NextEra Energy is trading above its 50 and 200-day simple moving average (“SMA”), signaling a bullish trend. The 50 and 200-day SMAs are key indicators for traders and analysts to identify support and resistance levels. It is considered particularly important, as this is the first marker of an uptrend or downtrend of the stocks.

NEE’s SMA 50 and 200 Day

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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 NEE stock to their portfolio.

Drivers Behind NextEra Energy’s Steady Stock Performance

The strengthening Florida economy is enhancing NextEra Energy’s growth prospects by generating new demand opportunities. With demand for clean electricity on the rise, the company is well positioned to meet it through strategic investments in infrastructure upgrades and system expansion. In addition, its subsidiary, Florida Power & Light Company, offers residential electricity rates that are significantly below the national average, providing a competitive advantage that continues to attract new customers.

NextEra Energy’s other subsidiary, Energy Resources, continues to make long-term investments in clean energy assets. The company expects to be able to add 76.6.5-107.6 gigawatt (“GW”) of new renewables in 2026-2032 to the generation portfolio via clean energy investments. Energy Resources’ renewable backlog is more than 29.8 GW now.

NextEra Energy continues to invest steadily to strengthen and expand its operations. The company plans to invest nearly $94.2 billion between 2025 and 2030 to support growth and infrastructure development. Of this, about $58.63 billion will be allocated to Florida Power & Light Company for new generation, transmission and distribution additions, and system upgrades, while roughly $35.56 billion will be invested in NextEra Energy Resources to further expand its operations.

NextEra Energy, a capital-intensive company with a largely domestic focus, is likely to benefit from the Federal Reserve’s decision to cut interest rates. The benchmark rate has been lowered to 3.5-3.75% and any additional rate cuts expected in 2026 could further reduce the company’s capital servicing costs.

NextEra Energy is also expanding its operations through strategic acquisitions. The acquisition of Symmetry Energy Solutions in January 2026 strengthens the company’s natural gas capabilities across 34 states and improves its ability to meet rising demand, particularly from data centers. Increasing electricity demand from data centers within its service regions is expected to support the company’s long-term growth prospects.

NextEra Energy’s Earnings Estimates Moving Up

The Zacks Consensus Estimate for NEE’s 2026 and 2027 earnings per share indicates year-over-year growth of 7.82% and 9.03%, respectively. The company expects to increase its earnings per share by 8% annually through 2032 from the 2025 level.

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NEE Stock Returns Better Than Its Industry

Return on equity (“ROE”) is a financial ratio that measures how well a company uses its shareholders’ equity to generate profits. The current ROE of the company indicates that it is using shareholders’ funds more efficiently than its peers.

NextEra Energy’s trailing 12-month ROE is 12.18%, ahead of the industry average of 10.77%.

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Duke Energy Corporation DUK is another utility that provides electric and gas services to millions of customers in its service region. The company has a well-chalked-out capital investment plan to further expand and strengthen its operations. The current ROE of Duke Energy is 9.67%, which is lower than the industry.

NextEra Energy Raises Shareholders’ Value

NextEra Energy plans to increase the dividend rate annually by 10%, at least through 2026, from the 2024 base and 6% annually from year-end 2026 through 2029, subject to its board’s approval. The company’s current quarterly dividend rate is 62.32 cents per share, resulting in an annual dividend of $2.49. The dividend yield of 2.69% is a tad better than the industry’s yield of 2.68%. Check NEE’s dividend history here.

Duke Energy has a long history of dividend payments and has paid dividends to its shareholders for more than 100 years. The company’s current dividend yield of 3.2% is better than the industry level.

NextEra Energy’s Shares Trading at a Premium

The company is currently valued at a premium compared with its industry on a forward 12-month P/E basis. NextEra Energy is currently trading at 22.78X compared with the industry average of 16.76X.

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Wrapping Up

NextEra Energy continues to deliver stable performance, supported by rising demand for clean energy across its service territories. The company is steadily expanding its clean energy portfolio to meet this growing demand, while Florida’s strong economic growth is creating additional opportunities for expansion.

NextEra Energy is also benefiting from contributions coming from acquired assets and its systematic investment to enhance the existing operations. The company will also gain from the interest rate decline.

Rising earnings estimates, stable dividend and a solid return on equity make a strong case for holding this Zacks Rank #3 (Hold) stock in your portfolio. Yet, since NEE is currently trading at a premium, it may be prudent to wait for a more attractive entry point before adding to positions.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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NextEra Energy, Inc. (NEE): Free Stock Analysis Report

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

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