Can Inorganic and Organic Assets Power NextEra's Long-Term Growth?

NextEra Energy Inc. NEE benefited through its well-timed strategic acquisitions, including Gulf Power in 2019 for $5.75 billion. This deal expanded NextEra Energy’s regulated utility footprint in Florida by integrating high-quality generation assets like Plant Oleander and a majority stake in Stanton Energy. The successful merger of Gulf Power into Florida Power & Light streamlined operations, achieved meaningful cost synergies and strengthened the utility’s customer base, laying a solid foundation for long-term earnings growth and dividend stability.

In 2023, a wholly owned subsidiary of NextEra Energy acquired a renewable energy portfolio from Energy Power Partners Fund I, L.P., North American Sustainable Energy Fund, L.P. and their affiliated service provider. The portfolio included 31 biogas projects, comprising one operational renewable natural gas facility and several operating landfill gas-to-electric plants.

These acquisitions are strategically aligned with NextEra Energy’s robust growth pipeline, including a renewable project backlog of over 28 GW and a planned capital expenditure of more than $72.6 billion through 2029 to strengthen its operations. Acquired and internally developed assets strengthen NextEra Energy’s ability to secure long-term power purchase agreements, optimize grid infrastructure and tap into new market segments.

The acquisitions improve earnings visibility, expand market presence and support the company’s long-term strategy to lead the energy transition, underscoring its appeal as a compelling long-term investment. However, NextEra Energy is likely to encounter significant competition for acquisition opportunities that may become available as a result of the consolidation of the energy industry.

How Utilities Are Gaining From Acquisitions

Utilities are leveraging strategic acquisitions to expand their regulated asset base, enhance operational efficiency and diversify energy portfolios. These deals provide stable cash flows, unlock synergies and accelerate clean energy adoption, ultimately supporting long-term earnings growth and strengthening shareholder value.

Utilities like Dominion Energy D and American Electric Power AEP are capitalizing on acquisitions to strengthen their clean energy and grid infrastructure portfolios. 

Dominion expanded its renewable footprint through solar acquisitions. AEP enhanced its transmission capabilities by acquiring wind and solar projects in key markets. These moves support regulatory growth, boost earnings visibility and align with long-term decarbonization goals.

NextEra Energy’s Earnings Estimates Moving Up

NextEra Energy expects its 2025 earnings per share to be in the range of $3.45-$3.70 compared with $3.43 a year ago. The Zacks Consensus Estimate for NEE’s 2025 and 2026 earnings per share indicates year-over-year growth of 7.29% and 7.95%, respectively. NEE expects to increase its earnings per share in the range of 6-8% annually through 2027 from the level of 2024.

NEE Stock Returns Better Than Its Industry

NextEra Energy’s trailing 12-month return on equity (“ROE”) is 12.06%, ahead of the industry average of 10.41%. 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 peers.

NEE’s Price Performance

NextEra Energy’s shares have gained 15.2% in the past three months compared with the Zacks Utility Electric-Power industry’s rise of 5.7%.

NEE’s Zacks Rank

NextEra Energy currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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