NextEra Outperforms Industry in a Year: Should You Buy the Stock?

Shares of NextEra Energy NEE have gained 12.6% in the past year compared with the Zacks Utility - Electric Power industry’s rise of 11.3%. The company has also outperformed the Zacks Utilities sector’s return of 7.1% in the same time frame.

NextEra Energy has seen its share price rise on the back of strong operational performance and a steadily expanding customer base. This continues to drive demand for its services. At the same time, declining interest rates are likely to reduce capital costs, further improving the outlook for this capital-intensive utility.

Rising electricity demand from data centers, AI applications and ongoing electrification, coupled with rising corporate demand for clean energy, creates a strong long-term growth opportunity for the company.

Price Performance (One year)

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Another company, Duke Energy Corporation DUK, has a strong capacity to generate clean electricity. In the past year, shares of Duke Energy have gained 13.7%. The company is making consistent investments to boost its clean energy capacity.

Should you consider adding NEE to your portfolio only based on positive price movements? Let’s delve deeper and find out the factors that can help investors decide whether it is a good entry point to add NEE stock to their portfolio.

What Is Driving NextEra Energy’s Steady Stock Performance?

Florida’s strengthening economy is creating additional growth opportunities for NextEra Energy by driving electricity demand. The company is well positioned to serve rising clean-energy needs through continued infrastructure upgrades and system expansion. Moreover, subsidiary Florida Power & Light Company (“FPL”) offers residential electricity rates well below the national average, strengthening its competitive position and supporting continued customer growth. In second-quarter 2026, FPL served more than 90,000 customers compared with the prior-year quarter.

NextEra Energy’s Energy Resources segment continues to expand its renewable energy footprint through sustained clean-energy investments. The company plans to add nearly 76.6-107.6 gigawatts (GW) of renewable generation capacity from 2026 through 2032, while its development backlog of more than 33 GW provides solid visibility into its long-term growth pipeline.

NextEra Energy is leveraging acquisitions and asset rotation to diversify the energy platform beyond its core regulated utility and renewable businesses. In 2026, the company completed the Symmetry acquisition, strengthening its natural gas capabilities for commercial and industrial customers, and acquired Caliber, adding non-operating shale energy interests.
 
NextEra Energy also completed the buyout of the remaining minority stake in the Duane Arnold nuclear plant and is targeting a restart by the first quarter of 2029. These transactions enhance NextEra Energy’s upstream, midstream and nuclear capabilities as demand for reliable and flexible power supply increases. The proposed merger with Dominion Energy would further broaden its exposure to regulated utilities, renewables, transmission, natural gas and nuclear assets.

Nearly 89% of NextEra Energy’s customers are residential, with commercial and industrial customers comprising the remainder. The company’s scale, technological capabilities and operating efficiency support consistent returns. Moreover, NEE’s extensive service territory and growing renewable energy portfolio strengthen its market position and provide a sustainable competitive advantage.

NextEra Energy’s Earnings Estimates Moving Up

The Zacks Consensus Estimate for NEE’s 2026 and 2027 earnings per share indicates a year-over-year increase of 8.09% and 8.73%, respectively.

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The same for DUK’s 2026 and 2027 earnings per share indicates a year-over-year increase of 6.5% and 6.49%, respectively.

NEE Stock Returns Better Than Its Industry

Return on equity (“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.

NextEra Energy’s trailing 12-month ROE is 12.28%, ahead of the industry average of 11.4%.

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Another utility, Dominion Energy D, is also making consistent capital investments to expand its clean energy generation assets. Dominion’s ROE is currently pegged at 9.62%, lower than its industry average.

NextEra Energy’s Shares Trading at a Premium

The company is currently valued at a premium compared with its industry on a forward 12-month P/E basis. NextEra Energy is currently trading at 19.85X compared with the industry average of 15.23X.

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Dominion Energy is trading at a P/EF12M of 17.95X, also a premium to the industry it belongs to.

NEE’s Net Margin

Net margin measures the percentage of revenue retained as profit after deducting all expenses, taxes and interest. NEE’s net margin is currently pegged at 28.44% compared with the industry’s 15.81%.

Rounding Up

NextEra Energy continues to post steady performance, supported by rising clean energy demand across its markets. The company is steadily expanding its clean energy portfolio to address this demand, while Florida’s robust economic growth is creating additional opportunities for long-term utility expansion.

This Zacks Rank #3 (Hold) company is poised to benefit from solid residential customer demand. Improving earnings estimates and a return on equity above the industry average further support the company’s investment appeal.

NextEra Energy is trading at a premium valuation, so it will be wiser for new investors to wait for a more attractive entry point before adding the stock for potential long-term returns. 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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