Morningstar | Strong Execution Continues at NextEra Energy; Reports Second-Quarter Earnings Growth. See Updated Analyst Note from 24 Jul 2019
We are reaffirming our $193 per share fair value estimate, along with our narrow economic moat and stable moat trend ratings, after NextEra Energy reported second-quarter operating earnings of $2.35 per share, compared with $2.08 in the year-ago period. Management reaffirmed its 2019 EPS guidance of $8.00 to $8.50, in line with our estimates.Investment opportunities at Florida Power & Light continue to be the core driver of growth at the unit. Regulatory capital for the quarter increased 8.1% compared with the prior-year quarter. The unit has significant capital opportunities driven by Florida's strong economy and population growth. By 2030, the utility aims to install 10 gigawatts of new solar capacity, of which the utility earns near immediate returns upon completion.
Recent Florida legislation also supports ongoing storm hardening investments. Battery storage, transmission, and gas generation round out the unit's regulated growth opportunities. We expect continued industry-leading regulatory outcomes with the company's planned January 2021 rate case filing, effective 2022.
At the recently acquired Gulf Power, management has set aggressive goals to align operating performance with FP&L. Increased capital growth opportunities should drive 14% annual regulatory growth. Combined with operational efficiencies, earnings are projected to increase 16%. We have full confidence in management's ability to meet these goals.
Energy Resources continues to have a strong pipeline of opportunities, and management continues to execute. The unit added more than 1,850 megawatts of renewable energy projects to its backlog, which now exceeds 11,700 megawatts. This supports its four-year target of 11.5 gigagwatts to 18.5 gigawatts. We continue to forecast it will deliver at the high end of its range. For the year, wind resource remained light, at 92% of expectations. Every 1% change in wind production reduces earnings roughly $0.01 to $0.02 per share.
NextEra Energy is a holding company, engaged in electric power and energy infrastructure. The company has two principal businesses, Florida Power & Light Company (FPL) and NextEra Energy Resources, LLC (NEER). FPL is a rate-regulated electric utility engaged primarily in the generation, transmission, distribution and sale of electric energy in Florida. FPL provides service to its electric customers through a transmission and distribution system that links its generation facilities to its customers. NEER, through its subsidiaries, owns, develops, constructs, manages and operates electric generation facilities in wholesale energy markets primarily in the United States and Canada.
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