NextEra Energy resumes upward trend after pullback in utilities
The utilities sector got hit with some selling pressure in the first part of November as investors were in risk-on mode and abandoned the safety of the sector. Almost all stocks in the sector fell in the first few weeks of November. One company that dropped was NextEra Energy (NYSE: NEE), but in its case, the loss was bigger than some of the other stocks.
From the end of October through November 8, NextEra dropped 6.82% while the Utilities Select Sector SPDR (NYSE:XLU) fell 3.89%. This seems a little odd because NextEra is the number one rated stock in Investor's Business Daily's electric utilities group.
The company has seen its earnings grow by 11% per year over the last three years and they were up 10% last quarter. Sales have increased by 3% per year over the last three years and they jumped 26% in the third quarter. The company boasts a profit margin of 24.1% and a return on equity of 11.8%.
While the earnings growth, sales growth, and management efficiency ratings aren't great compared to other companies in other industries, but within the utilities sector these statistics are really good.
The stats above aren't the only ones that are solid. Looking at the Tickeron Fundamental Analysis overview, the Tickeron Profit vs. Risk Rating is a 1 and that is the best reading a company can get. It indicates low risk on high returns. The average Profit vs. Risk Rating for the industry is 53, placing this stock well above average.
Another really good rating is the PE Growth Rating. NextEra's rating is 5, pointing to outstanding earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Valuation Rating of 46 indicates that the company is fair valued in the industry. A rating of 1 points to the most undervalued stocks, while a rating of 100 points to the most overvalued stocks. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization.
Turning our attention to the technical picture for NextEra, we see on the daily chart that the stock has been trending higher over the past year with a well-formed trend channel. The recent pullback brought the stock down to and below the lower rail, but the stock has bounced back in the last few days.
The daily overbought/oversold indicators dropped in to oversold territory on the pullback and it was the first time since last December that both indicators had been oversold.
If we step a little further and look at a weekly chart of the stock, we see a stock that has been trending higher for a long time now. The stock was in a trend channel from the end of 2016 through the end of 2018, but the rally took it to a new level in 2019. We see how the trajectory of the rally changed and became much steeper.
Looking at the sentiment toward NextEra, analysts are extremely bullish on the stock with 14 "buy" ratings, one "hold" rating, and one "sell" rating. This puts the buy percentage at 87.5% and that is well above average. The short interest ratio is at 3.5 and that is a little higher than average, but not terribly high.
The fundamentals for NextEra are really good and the technical picture looks really good as well. The extreme bullishness from analysts is a little concerning, but it seems to be warranted in this case.
Momentum Indicator for NEE turns positive, indicating new upward trend
NEE saw its Momentum Indicator move above the 0 level on April 17, 2024. This is an indication that the stock could be shifting in to a new upward move. Traders may want to consider buying the stock or buying call options. Tickeron's A.I.dvisor looked at 88 similar instances where the indicator turned positive. In of the 88 cases, the stock moved higher in the following days. The odds of a move higher are at .
Technical Analysis (Indicators)
Bullish Trend Analysis
The Moving Average Convergence Divergence (MACD) for NEE just turned positive on April 23, 2024. Looking at past instances where NEE's MACD turned positive, the stock continued to rise in of 47 cases over the following month. The odds of a continued upward trend are .
The 10-day moving average for NEE crossed bullishly above the 50-day moving average on March 18, 2024. This indicates that the trend has shifted higher and could be considered a buy signal. In of 15 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where NEE advanced for three days, in of 338 cases, the price rose further within the following month. The odds of a continued upward trend are .
NEE may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
The Aroon Indicator entered an Uptrend today. In of 339 cases where NEE Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .
Bearish Trend Analysis
The 10-day RSI Indicator for NEE moved out of overbought territory on April 10, 2024. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 44 similar instances where the indicator moved out of overbought territory. In of the 44 cases, the stock moved lower in the following days. This puts the odds of a move lower at .
The Stochastic Oscillator has been in the overbought zone for 1 day. Expect a price pull-back in the near future.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where NEE declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
Fundamental Analysis (Ratings)
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating well-balanced risk and returns. The average Profit vs. Risk Rating rating for the industry is 71, placing this stock slightly better than average.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. NEE’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is fair valued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (2.740) is normal, around the industry mean (1.706). P/E Ratio (17.606) is within average values for comparable stocks, (23.333). Projected Growth (PEG Ratio) (2.625) is also within normal values, averaging (2.620). Dividend Yield (0.030) settles around the average of (0.074) among similar stocks. P/S Ratio (4.579) is also within normal values, averaging (3.505).
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
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General Information
an investment holding company with interests in generating and distributing electricity
Industry ElectricUtilities