NEE
NEENextEra Energy is a major player in the electric services industry, primarily generating renewable energy.
It is widely recognized as America's leading clean energy provider, distinguished by its world-class renewable power portfolio and regulated utility operations.
Updated: January 14, 2026, 16:00 EST
Investment Opinion: Should I buy NEE Today?
Based on a comprehensive analysis, NextEra Energy (NEE) presents a compelling long-term investment case anchored by strong fundamentals, though it is not without its risks.
Technical & Valuation Outlook NEE's technical performance has been muted, underperforming the market recently but demonstrating the lower volatility typical of a utility stock. Its valuation sends mixed signals; the stock trades at a premium based on sales and cash flow metrics (high PS and EV/EBITDA), but this appears justified by robust projected earnings growth, as indicated by an attractive forward P/E and a PEG ratio below 1.0.
Fundamental Strength & Risks The company's core strength lies in its impressive fundamental performance, featuring strong revenue growth, expanding profit margins above 30%, and excellent working capital management. Key risks to monitor include its moderate financial leverage, a low interest coverage ratio that requires attention, and the capital-intensive nature of its operations, which currently yields a low Return on Equity.
Recommendation: BUY NEE is a high-quality utility with exceptional growth credentials for its sector. While its current price reflects a premium, the strong earnings trajectory and defensive characteristics provide a solid foundation for long-term appreciation. Investors comfortable with the utility sector's pace and the specific risks related to leverage should consider this a worthwhile holding for a diversified portfolio.
*This is not investment advice, for reference only.*
NEE 12-Month Price Forecast
RockFlow Model Forecast: Three Scenarios for 2026
Of course. Here is a 12-month outlook for NextEra Energy (NEE) based on the analysis provided.
*12-Month Outlook for NextEra Energy (NEE)*
Catalysts: The primary catalyst for NEE remains its industry-leading transition to renewable energy, which is expected to drive continued earnings growth. Its status as a regulated utility also provides a stable, defensive income stream through dividends, which is attractive in an uncertain economic climate.
Risks: The key risks to monitor are the company's moderate financial leverage and its low interest coverage ratio, making it sensitive to potential rises in interest rates. Furthermore, as a capital-intensive business, execution on its large-scale renewable projects is critical to maintaining its growth premium.
Outlook & Target: While the stock trades at a premium valuation, its strong fundamental performance and projected earnings growth (indicated by a PEG ratio below 1.0) justify this. Given the solid foundational analysis and lack of a specific analyst target provided, a conservative 12-month price target range would be in the $85 - $95 area, implying a potential upside from the current price of $81.64, alongside its dividend yield.
Wall Street Consensus
Most Wall Street analysts are optimistic about NEE's 12-month outlook, with consensus target around $81.98, indicating expected upside potential.
Bulls vs Bears: NEE Investment Factors
Overall, NEE has investment potential but also faces challenges. Here are key factors to weigh before investing.
Bullish
- Strong dividend yield: Offers attractive 2.7% dividend yield with powerful growth potential.
- Best-in-class AI energy stock: Positioned as a leading AI energy stock with breakout potential.
- Hedge fund favorite: Ranked among the best utility stocks by hedge funds.
- Upcoming earnings catalyst: Q3 2025 results could demonstrate strong earnings and revenue growth.
- Industry leadership position: Maintains significant market cap and reputation in electric utilities.
Bearish
- Recent stock underperformance: Shares have performed badly compared to broader market indices.
- Sector-wide weakness: Energy sector had quiet year with only 4% average YTD gains.
- Recent price decline: Stock dipped 1.27% in recent trading session, underperforming market.
- Short-term momentum concerns: Fall price surge wasn't enough to beat short-term market performance.
- Utility sector headwinds: Facing challenges common to electric power utility companies.
NEE Technical Analysis
NEE has exhibited mixed performance, showing relative stability near current levels but underperforming the broader market over recent months.
The stock has posted a marginal 0.53% gain over one month but declined 2.47% over three months, significantly underperforming the market by 5.84% during the latter period. This muted performance aligns with its low beta of 0.73, indicating lower volatility than the overall market.
Currently trading at $81.64, NEE sits approximately 6.7% below its 52-week high after experiencing a maximum drawdown of 15.82% over the past year. The stock appears to be in a neutral position relative to its annual range, neither clearly overbought nor oversold at current levels.
| Period | NEE Return | S&P 500 |
|---|---|---|
| 1m | +0.4% | +1.3% |
| 3m | -1.6% | +5.7% |
| 6m | +11.3% | +10.6% |
| 1y | +18.3% | +16.5% |
| ytd | +1.3% | +1.1% |
NEE Fundamental Analysis
Revenue & Profitability NEE demonstrated strong revenue growth with Q3 2025 revenue increasing by 18.9% to $7.97 billion from $6.70 billion in Q2 2025. Profitability metrics improved significantly, with net profit margin rising to 30.6% in Q3 from 30.3% in Q2, supported by enhanced operational efficiency and a notable gross profit margin of 66.2%.
Financial Health The company maintains moderate leverage with a debt-to-equity ratio of 1.79, though the relatively low interest coverage ratio of 2.2 warrants attention for debt servicing capacity. Operating cash flow coverage remains adequate, with operating cash flow per share at $1.96, indicating sufficient liquidity despite a current ratio below 1.
Operational Efficiency NEE's operational performance shows room for improvement, with Return on Equity at 4.5% and asset turnover of just 0.04, reflecting capital-intensive operations. The negative cash conversion cycle of -23.9 days highlights efficient working capital management, allowing the company to utilize supplier financing effectively.
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Level Analysis
NEE appears moderately valued based on mixed signals across key metrics. The trailing PE of 28.98 is elevated, but the forward PE of 15.92 suggests significant expected earnings growth, which is confirmed by the PEG ratio of 0.83 (below 1.0, indicating potential undervaluation relative to growth). However, the high PS ratio of 6.38 and very high EV/EBITDA of 54.0 are concerning, pointing to rich valuation relative to sales and operating cash flow, while the PB of 2.62 seems reasonable for a asset-intensive utility.
Peer Comparison
Without specific industry average data provided, a precise peer comparison cannot be conducted. Generally, for the utilities sector, a forward PE near 16 is fairly aligned with typical ranges, but the exceptionally high EV/EBITDA and PS ratios would likely be above industry norms, suggesting NEE trades at a premium to many utility peers. The stock's valuation is heavily reliant on the market's confidence in its projected earnings growth materializing.
Investment Risk Disclosure
Of course. Here is a professional risk analysis for NEE based on the provided metrics.
Volatility Risk NEE exhibits lower volatility risk relative to the broader market, as indicated by its Beta of 0.733. This suggests the stock's price is generally less volatile than the market average; historically, it would be expected to rise or fall only about 73% as much as the market on a given day. However, the stock has experienced a significant maximum drawdown of -15.82% over the past year, indicating it is still susceptible to substantial price declines during broader market downturns or company-specific events.
Other Risks The absence of significant short interest suggests that the market currently does not perceive substantial fundamental downside risk or have a strong bearish conviction on the stock in the near term. This lack of speculative pressure can be viewed positively. However, this status does not preclude other risks, such as potential liquidity constraints or event-driven risks (e.g., regulatory changes or project delays) that are not captured by this specific metric.
FAQs
Based on the analysis, I maintain a bullish view on NEE for long-term growth investors.
Key supporting factors include its strong fundamental growth (18.9% revenue increase, 30.6% net margin) and leadership position as a premier AI-energy stock with an attractive dividend. The primary concern is its recent underperformance and rich valuation on some metrics (e.g., EV/EBITDA), creating near-term volatility.
This stock is best suited for long-term investors seeking stable dividends and exposure to the energy transition, who can tolerate short-term price fluctuations for potential growth.
Based on the metrics provided, NEE appears fairly valued to slightly overvalued. While its forward P/E of 15.9 and a PEG ratio below 1.0 (0.83) suggest it is reasonably priced relative to its growth expectations, its very high Price-to-Sales (6.38) and EV/EBITDA (54.0) ratios are significantly elevated, even for a premium utility. These high multiples indicate the market is pricing in substantial future growth from its renewable energy investments. Ultimately, the stock's valuation hinges heavily on its ability to deliver on its projected earnings growth, making its current price appear full.
Based on the provided information, here are the key risks of holding NEE, ordered by importance.
1. Medium-Term Underperformance Risk: The stock has significantly underperformed the broader market over a three-month period (-2.47% vs. +3.37% for the market), indicating a notable risk of investors missing out on broader market gains while being exposed to potential declines. 2. Leverage and Interest Coverage Risk: The company's moderate debt-to-equity ratio (1.79) is coupled with a low interest coverage ratio (2.2), creating a specific financial risk regarding its ability to comfortably service debt, especially in a rising interest rate environment. 3. Capital-Intensive Business Model Risk: A very low asset turnover (0.04) and a modest Return on Equity (4.5%) highlight the inherent operational risk of being a capital-intensive utility reliant on massive, long-term infrastructure investments, which can pressure profitability and returns. 4. Event-Driven Price Decline Risk: Despite a low beta, the stock experienced a significant maximum drawdown of -15.82% over the past year, signaling a vulnerability to event-driven risks such as regulatory changes, project delays, or adverse weather events.
Of course. Based on the provided fundamental analysis and market context, here is a professional forecast for NextEra Energy (NEE) through 2026.
NEE Stock Forecast for 2026
1. Target Price Range: * Base Case (2026): $95 - $110. This assumes continued steady execution on renewable energy projects and stable regulatory support. * Bull Case (2026): $115 - $130. This scenario would require accelerated renewable adoption, successful execution of large-scale projects ahead of schedule, and a favorable decline in interest rates.
2. Key Growth Drivers: * Leadership in Energy Transition: NEE’s first-mover advantage and massive scale in renewable energy (wind, solar, battery storage) position it to capitalize on the global shift away from fossil fuels. * Regulated Utility Backbone: The stable, predictable earnings from its regulated Florida Power & Light business provide a financial floor and secure dividend, reducing overall volatility. * Strong Capital Allocation: Demonstrated by high gross profit margins (66.2%) and a negative cash conversion cycle, indicating exceptional operational efficiency and the ability to fund growth internally.
3. Main Assumptions: * The global push for decarbonization continues unabated, providing a tailwind for renewable investments. * The company successfully manages its moderate debt load without significant cost increases from rising interest rates. * There are no major regulatory setbacks or unforeseen delays in its large-scale project pipeline.
4. Uncertainty of the Forecast: * This forecast is highly sensitive to macroeconomic factors, particularly interest rates. NEE’s leveraged balance sheet and capital-intensive projects mean its valuation and growth prospects could be significantly impacted by changes in the cost of capital. Execution risk on its ambitious project pipeline remains a key variable.
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