NEE NextEra Energy
Premium utility-renewables hybrid; normalize ROE down as tax credits fade.
The story
Best-in-class regulated utility plus the largest US renewables fleet, benefiting from data-center demand and tax credits. Trailing 17% ROE is inflated by ITC/PTC benefits and above-trend margins; normalized ROE should settle near 11-12% as credits phase down and rate-base growth normalizes. Premium franchise but market prices in sustained above-regulatory returns.
Trailing 17% ROE is not sustainable—ITC/PTC tax credits and peak renewables margins inflate it; normalized 11.5% reflects allowed utility returns (~9-10%) blended with renewables project IRRs that compress as competition intensifies. Book growth of 7% near-term captures data-center-driven capex backlog but terminal 4.5% respects the risk-free ceiling. Beta trimmed to 0.55 to match the industry anchor as rate sensitivity moderates.
Value drivers
| Return on equity (normalized) | 11.5% |
| Book-value growth (Y1) | 7.0% |
| Terminal book growth | 4.5% |
| Beta | 0.55 |
| Failure probability | 0.4% |
| Cost of equity | 7.3% |
Valuation bridge
| PV of excess returns | 17.58B |
| PV of terminal excess | 39.18B |
| Equity value | 110.92B |
| ÷ shares → per share | $53.18 |
News
score · 8 articles
- 3 Top Dividend Stocks to Buy in September
- Stock Market Today, Sept. 1: Fervo Energy Surges 28% on 396-Megawatt Google Power Deal
- Can AI Driven Data Center Growth Continue to Strengthen NEE's Backlog?
- NextEra Energy (NEE) Pushes Back On 60 Day Merger Review Delay
- NextEra Energy (NEE) Stock Looks Fully Priced for a Mature Utility
- The Engine Behind GEV Stock Has Real Parts
- Vistra Stock Is Down, But Is This Power Producer's Dip An Opportunity?
- PG&E Stock Is Priced For A Decision It Does Not Make
Projected excess returns on equity
| Yr | Book equity | ROE | Excess return | PV |
|---|---|---|---|---|
| 1 | 54.61B | 11.5% | 2.31B | 2.15B |
| 2 | 58.43B | 11.4% | 2.39B | 2.08B |
| 3 | 62.31B | 11.2% | 2.46B | 2.00B |
| 4 | 66.23B | 11.1% | 2.53B | 1.91B |
| 5 | 70.15B | 11.0% | 2.58B | 1.82B |
| 6 | 74.05B | 10.8% | 2.63B | 1.72B |
| 7 | 77.91B | 10.7% | 2.66B | 1.63B |
| 8 | 81.68B | 10.5% | 2.67B | 1.52B |
| 9 | 85.35B | 10.4% | 2.68B | 1.42B |
| 10 | 88.88B | 10.3% | 2.67B | 1.32B |
Key risks
- Tax credit phaseout compresses renewables project economics and ROE
- Rising rates reduce rate-base growth and increase financing costs
- Regulatory pushback on cost recovery for data-center infrastructure
Catalysts
- Data-center power contracts accelerate backlog and visible earnings
- Rate cases approve higher allowed returns on growing rate base
- Renewables tax credit clarity extends through 2032+