NextEra Energy (NEE) Brandon Blackwell Utilities Sector Analyst - - PowerPoint PPT Presentation

College of Charleston Investment Program

NextEra Energy (NEE)

Brandon Blackwell Nick Windham Utilities Sector Analyst Utilities Sector Analyst

January 2017

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Agenda

SCHOOL OF BUSINESS INVESTMENT PROGRAM

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Investment Thesis Utilities Sector Overview NextEra Background Fundamental Analysis Technical Analysis DCF Valuation Review and Proposal Questions

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Investment Thesis

• Portfolio Diversification
• Strong and steady dividend yield
• Diversified utility portfolio
• Unfairly priced with potential of reduced emphasis on renewables
• Interest rates and political environment favors utility sector
• Strong Revenue Growth and EPS

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Clarifications

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• Megawatts
• Regulated Utilities
• Wholesale Utilities

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Industry Overview

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• What does Utilities consist of?
• Utility Sector Transformation Trends

○ Upgrading aging infrastructure ○ Generation, Environmental, Renewables ○ Natural Gas pipelines, storage, and distribution

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Industry Performance and Indicators

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Political Environment/Tax Rate “Risk”

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• Shares fall after Trump inauguration
• Investors are flocking to Utilities with volatility in market
• The “scare” of renewables
• Company keeps guidance strong amidst tax rate changes
• Rising Tax Rate

○ Two Recovery Scenarios

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About NextEra

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• Founded as Florida Power & Light in 1925
• 14,700 employees in 30 US states and Canada
• Headquarters located in Juno Beach, Florida.
• Two Principal subsidiaries included:

○ Florida Power & Light Company ○ Nextera Energy Resources LLC ○ NextEra Energy - one of the largest operators of commercial nuclear power units in the United States.

• Ranked No. 1 in the electric and gas utilities industry in

Fortune's 2016 list of "World's Most Admired Companies”

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Business Model

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• Employees

○ Best Employers for Healthy Lifestyles Award ○ Continuous Learning and Training Programs.

• Sustaining Communities

○ Employees volunteers 70,200 hours in 2015 ○ Raised 3.9 million for the community

• Outstanding Customer Value

○ affordable, reliable, and clean energy. ○ Care to Share Program

• Respect for the Environment

○ Produce more solar and wind energy than any company in the world. ○ In 2015 NextEra Energy avoided 66.1 Million tons of CO2 emissions. ○ 52% Lower CO2 emission rate than US electric sector. ○ Programs to protect wildlife species and habitats.

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Company Structure

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• Consolidated Revenues: $16.2 billion
• Two streams of revenue

○ Regulated Utility ○ Wholesale Power Generation

• Price Insensitive Customers
• Growth outside of US

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Utilities Portfolio

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The Network

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About NextEra: Leadership

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James L. Robo Chairman and CEO Eric Sigaly President and CEO NextEra Energy Resources, LLC Armando Pimentel President and CEO NextEra Energy Resources, LLC

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NEE Outlook

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• Wisconsin's largest Solar Energy Facility
• Sale of Fibernet to Crown Castle
• Oncor Acquisition
• Greenfield Gas Infrastructure Projects

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1 Year

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3 Year - NEE

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Financials - Revenue Growth

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Financials - ROE

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Forward Looking P/E

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Forward Looking Earnings Growth

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Forward Looking EPS

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Growth of $10,000

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Industry Peers

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1 Year - NEE vs DUK vs SO

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NEE Inputs

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NEE Inputs

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Valuation of NEE

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Valuation of NEE

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Overview

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Strengths:

• Diversified Utility Company
• Two Separate Revenue Streams
• High Revenue Growth
• High EPS

Threats:

• Fluctuations to commodity prices
• Trump
• Tax Rates

Opportunities:

• Renewable Projects
• Strong Forward Looking Financials
• Acquisition of Oncor

Weaknesses:

• Price/Book
• Price/Sales
• Missing Earnings Q4

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Proposal

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• Buy 125 of NEE at $123.80 for a total of $15,475

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Portfolio

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Questions?