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

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

College of Charleston Investment Program January 2017 NextEra Energy (NEE) Brandon Blackwell Utilities Sector Analyst Nick Windham Utilities Sector Analyst 1 Agenda Investment Thesis Utilities Sector Overview NextEra Background


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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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College of Charleston Investment Program

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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College of Charleston Investment Program

Clarifications

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  • Megawatts
  • Regulated Utilities
  • Wholesale Utilities
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College of Charleston Investment Program

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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College of Charleston Investment Program

Industry Performance and Indicators

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College of Charleston Investment Program

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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College of Charleston Investment Program

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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College of Charleston Investment Program

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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College of Charleston Investment Program

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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College of Charleston Investment Program

Utilities Portfolio

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College of Charleston Investment Program

The Network

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College of Charleston Investment Program

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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College of Charleston Investment Program

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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College of Charleston Investment Program

1 Year

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College of Charleston Investment Program

3 Year - NEE

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College of Charleston Investment Program

Financials - Revenue Growth

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College of Charleston Investment Program

Financials - ROE

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College of Charleston Investment Program

Forward Looking P/E

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College of Charleston Investment Program

Forward Looking Earnings Growth

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College of Charleston Investment Program

Forward Looking EPS

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College of Charleston Investment Program

Growth of $10,000

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College of Charleston Investment Program

Industry Peers

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College of Charleston Investment Program

1 Year - NEE vs DUK vs SO

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College of Charleston Investment Program

NEE Inputs

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College of Charleston Investment Program

NEE Inputs

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College of Charleston Investment Program

Valuation of NEE

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College of Charleston Investment Program

Valuation of NEE

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College of Charleston Investment Program

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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College of Charleston Investment Program

Proposal

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  • Buy 125 of NEE at $123.80 for a total of $15,475
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College of Charleston Investment Program

Portfolio

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College of Charleston Investment Program

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Questions?