Insiders were on holiday during the week of Independence Day as it was one of the slowest weeks of buying we’ve seen in a while. It’s understandable. When you are a big shot, it’s off to the beach house to celebrate and entertain for a full week of July 4th fun.
Fortunately, we can stick with our Change of Heart theme despite the skinny list of buys on last week’s roster. (Change of Heart is when an insider has predominantly sold company stock and rarely, if ever, bought previously.)
NextEra Energy, Incorporated’s (NEE) Chief Executive Officer (CEO) meets the never bought before standard. Prior to July 1st, CEO John Ketchum sold NEE stocks eight consecutive times, banking $9.9 million since September 2017. You can buy a nice beach house with that sort of money!
Ketchum kicked off July with his first buy, and he came out of the box swinging in a big way acquiring 12,909 shares at $78.33 for a little north of $1 million. (1)
NextEra Energy generates, transmits, distributes, and sells electric power to retail and wholesale customers in North America. The company generates electricity through wind, solar, nuclear, coal, and natural gas facilities. It also develops, constructs, and operates long-term contracted assets that consists of clean energy solutions, such as renewable generation facilities, battery storage projects, and electric transmission facilities; sells energy commodities; and owns, develops, constructs, manages and operates electric generation facilities in wholesale energy markets.
As of December 31, 2021, the company had approximately 28,564 megawatts of net generating capacity; approximately 77,000 circuit miles of transmission and distribution lines; and 696 substations. It serves approximately 11 million people through approximately 5.7 million customer accounts in the east and lower west coasts of Florida.
The CEO’s timing is interesting because the utility company will release its second quarter earnings before the stock market opens on Friday, July 22, 2022. (2) It’s speculation on our part, but you have to wonder, what Chief Executive would have a Change of Heart and invest seven-figures on the doorstep of a bad earnings announcement? Again, connecting dots, but if NEE was on the verge of releasing results that might disappoint Wall Street and investors, it might make more sense to wait and see if the stock price gets cheaper before dumping in a million bucks.
Analysts forecast the energy company to earn a consensus profit of $0.72 for the second quarter on expected revenue of $5.14 billion. NextEra exceeded Wall Street’s earnings per share (EPS) projections in each of the last four quarters. (3)
We tend to pay more attention to annual than quarterly expectations. As such, NEE’s full year 2022’s bottom line is slated to hit $2.85 per share and $3.07 in 2023. In the last five years, NextEra Energy traded with an average price to earnings (P/E) ratio of 27.80, topped at 36.76, and bottomed at 21.97.
If NEE hits the Street’s 2023 EPS prediction of $3.07, we arrive at the following possible price targets based on its recent average and low P/Es:
- Average P/E: $85.35
- High P/E: $112.85
- Low P/E: $67.45
The stock trades at $80.25 as of this keystroke and has a one-year price target of $91.67. (4)
NextEra might not have the most exciting potential upside, but its dividend history might be attractive to growth and income-type investors. NEE is a member of an exclusive club know as Dividend Aristocrats.
There are four criteria required to be a Dividend Aristocrat: (5)
- S&P 500 member
- Increased dividends for at least 25 consecutive years
- Minimum market cap of $3 billion
- Average daily volume of at least $5 million for three-month period before the S&P quarterly rebalancing
OVERALL: With a five-year beta of 0.45, some upside potential, and a robust history of dividend increases, NextEra Energy, Inc. (NEE) is appropriate for more conservative investors looking for some growth potential with rising income.
1 – https://www.secform4.com/insider-trading/1667990.htm
2 – https://www.investor.nexteraenergy.com/news-and-events/news-releases/2022/07-08-2022-113028326
3 – https://finance.yahoo.com/quote/NEE/analysis?p=NEE
4 – https://finance.yahoo.com/quote/NEE?p=NEE&.tsrc=fin-srch
5 – https://money.usnews.com/investing/stock-market-news/articles/dividend-stocks-aristocrats