Nextera Energy Inc (NEE)

Conclusion

NextEra Energy is a US utility. Its Florida Power & Light business serves about 6 million customer accounts, and its wholesale business builds and runs wind, solar, nuclear, gas and battery assets. On 2026-11-09 the shares were priced at 86.86 USD, giving a market capitalisation of 182.17 billion USD and an enterprise value of 290.53 billion USD.

The verdict is fair. The current P/E of 15.66 sits well below its ten-year median of 24.67, a premium of -36.5%, while EV to EBITDA of 16.87 is slightly above its median of 16.26, a premium of 3.8%. The fair value band runs from 72.75 to 109.13 USD with a midpoint of 90.94 USD, giving a margin of safety of 4.7% at the current price. The DCF per-share value is not available, and the reverse DCF is not available either, so the growth the price implies cannot be set against the growth delivered. Delivered EPS growth was 16.0% a year over three years and 17.15% over five, while next year's EPS growth estimate is 8.6%.

The strongest numbers are the operating margin of 29.7%, which is above its median of 28.15%, five-year EPS growth of 17.15% a year, and seven earnings beats in the last eight quarters. The weakest are interest coverage of 2.45x, net debt of 6.29 times EBITDA, and trailing free cash flow conversion of -13.9%. If borrowing costs rise or earnings fall, the balance sheet would have little room to absorb the shock.

Financial health

Financial strength is red, held down by four weak readings. The current ratio is 0.53 and the quick ratio is 0.34, so short-term obligations are well above liquid assets. Net debt is 6.29 times EBITDA, debt to equity is 1.85, and interest coverage is 2.45x. The Altman Z-score of 1.06 falls in the distress zone, but that model was designed for manufacturers, and a regulated utility is not one, so the reading needs care. Insolvency risk: low, about 0.6% by the estimate of the Ohlson model over one to two years.

Earnings quality

Earnings quality is red, weighed down mainly by cash generation. Trailing free cash flow conversion is -13.9%, against 27.6% averaged over five years, and free cash flow after stock-based compensation is -1.62 billion USD. The accrual ratio of -2.81% and a Piotroski score of 5 out of 9 are more reassuring. Stock-based compensation to revenue is not available because the company does not report it, and the Beneish M-score is not available. The share count has risen at a compound rate of 1.19% a year over five years. Earnings beat estimates in seven of the last eight quarters, with an average surprise of 4.04%. However, next-year estimates were cut by 1.0% over 90 days, with six downward revisions against three upward in the last 30 days.

Profitability

Profitability is green. The gross margin of 62.4% is above its median of 58.05%, the operating margin of 29.7% is above its median of 28.15%, and the net margin of 39.92% compares with a median of 22.9%. Return on invested capital is 6.19% against a WACC of 7.33%, a roic minus wacc of -1.14%, which is neutral and means the return on capital sits slightly below the cost of capital. The five-year median ROIC is 6.17%. Return on equity of 18.92% is flattered by leverage. The DuPont split at 2025-12-31 shows a net margin of 24.87%, an asset turnover of 0.1292 and an equity multiplier of 3.8954, so most of the high return comes from the balance sheet rather than from operations.

Growth

Growth is green. Revenue has compounded at 9.45% a year over three years, 8.83% over five years and 4.62% over ten. Earnings per share has grown faster: 16.0% a year over three years, 17.15% over five and 8.16% over ten. Revenue rose in only 5 of the 10 comparable years, so the growth has not been consistent year to year. Free cash flow per share compounded at 68.32% a year over five years, but over ten years the rate is 2.36%, so the five-year figure should be read with that longer record in mind.

Valuation

Valuation is yellow, as the verdict is fair with a margin of safety of 4.7%. The P/E of 15.66 sits at a premium of -36.5% to its ten-year median of 24.67. EV to EBITDA of 16.87 is a premium of 3.8% to its median of 16.26, price to sales of 6.25 is a premium of -1.6% to 6.35, and price to book of 2.96 is a premium of -7.2% to 3.19. The price to free cash flow median of 66.07 covers seven years, but the current multiple cannot be used because free cash flow is negative, and the free cash flow yield is -0.89%. The DCF uses a discount rate of 8.87% and terminal growth of 2.5%, but the per-share value is not available. The fair value band runs from 72.75 to 109.13 USD with a midpoint of 90.94 USD, which is also the fair value from historical multiples. This is an order of magnitude built on fixed assumptions, not a price target. The dividend yield is 2.79% and the forward yield is 2.87%. Payout on free cash flow is not meaningful while free cash flow is negative.

Risks

The main risks sit in the balance sheet. Net debt of 6.29 times EBITDA and interest coverage of 2.45x mean that higher borrowing costs or lower earnings would absorb a larger share of cash flow. A current ratio of 0.53 means short-term obligations are not covered by current assets, so they would have to be refinanced. Negative free cash flow means the company currently relies on outside funding for its investment programme. Weak next-year estimate revisions, with six downward against three upward in the last 30 days, put pressure on the 8.6% growth estimate. Several values are not available: the DCF per-share value, the reverse DCF, stock-based compensation, the Beneish M-score and the current price to free cash flow. This analysis has no debt maturity schedule and no revenue by segment, so it cannot show when debt falls due or which business drives growth.