NEE 71.9 (+1.31%)
US65339F1012Utilities - RegulatedUtilities - Regulated Electric

Last update on 2024-06-06

NextEra Energy (NEE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

NextEra Energy (NEE) demonstrates a strong financial position with a Piotroski F-Score of 8/9 in 2023, indicating robust profitability, liquidity, and efficiency.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
Learn more...

Short Analysis - Piotroski Score: 8

We're running NextEra Energy (NEE) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
1
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
1
Current Ratio is growing?
1
Number of shares not diluted?
0
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
1

NextEra Energy (NEE) achieved a high Piotroski F-Score of 8 out of 9, indicating it is financially strong. The analysis shows that NEE has positive profitability metrics with consistently rising net income and cash flow, improving return on assets, and operating cash flow higher than net income. Although the leverage has slightly decreased, showing cautious financial management, its current ratio reveals moderate liquidity with room for improvement. Despite a minor increase in outstanding shares resulting in some dilution, NEE recorded substantial growth in gross margin and asset turnover ratio, emphasizing enhanced efficiency.

Insights for Value Investors Seeking Stable Income

Given the high Piotroski F-Score and strong financial performance, NextEra Energy (NEE) appears to be a robust investment candidate. The company's consistent profitability, efficient asset utilization, and slight decrease in leverage reflect sound management. However, potential investors should be mindful of the share dilution and monitor liquidity improvements. Overall, the stock is worth consideration for your investment portfolio.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of NextEra Energy (NEE)

Company has a positive net income?

Net income indicates the financial health of a company. A positive net income reflects profitability and strengthens investor confidence.

Historical Net Income of NextEra Energy (NEE)

For NextEra Energy (NEE), the net income in 2023 is $7.310 billion, which is positive. Over the past 20 years, the company has shown a consistent positive net income, with significant growth evident in the recent years. Specifically, the net income has surged from just $0.89 billion in 2003 to the current $7.310 billion in 2023. This continuous profitability and growth trend is a positive indicator, earning NextEra Energy one point for this Piotroski criterion.

Company has a positive cash flow?

Cash Flow from Operations (CFO) refers to the total amount of money generated by a company's core business operations. It is a key indicator of its financial health.

Historical Operating Cash Flow of NextEra Energy (NEE)

With CFO of $11.3 billion in 2023, NextEra Energy's operations are generating significant positive cash flow. This is a good indicator of the company's financial health, and it is consistent with a positive trend over the past 20 years. The CFO has steadily increased from $2.25 billion in 2003, highlighting continuous growth. Therefore, this criterion scores 1 point.

Return on Assets (ROA) are growing?

Change in ROA compares the Return on Assets from one period to another. An increasing ROA indicates improved financial performance.

Historical change in Return on Assets (ROA) of NextEra Energy (NEE)

NextEra Energy (NEE) has seen its ROA rise from 0.0277 in 2022 to 0.0435 in 2023. This improvement reflects enhanced efficiency in utilizing its assets to generate income. If analyzing this over a longer historical period, it's noteworthy to mention that NEE's ROA has outperformed its 20-year trajectory in 2023, indicated by a significant climb. While the industry's median has shown fluctuations around the 0.5 range, NEE's 2023 figure signifies robust asset productivity despite historically trailing the industry. This trend is highly positive, thus it merits awarding 1 point in the Piotroski Analysis.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income: This criterion checks if the company's cash flow from operations is greater than its net income.

Historical accruals of NextEra Energy (NEE)

For NextEra Energy (NEE) in 2023, the Operating Cash Flow is $11.301 billion while the Net Income is $7.310 billion. Since the Operating Cash Flow is higher than the Net Income, this is a positive indicator of the company's ability to generate cash. The result adds 1 point to the Piotroski score. Historical data also supports a generally positive trend in operating cash flow with significant improvements in recent years, indicating strong cash management and operational performance, with 2023 showing a substantial increase to $11.301 billion. The detailed annual figures reflect a consistent growth in operating cash flow, juxtaposed with a steady increase in net income, further solidifying a positive trend. This is a good trend as it reflects that the company is efficiently converting its earnings into cash.

Liquidity of NextEra Energy (NEE)

Leverage is declining?

Change in Leverage: This criterion assesses the company's use of debt compared to equity over a period of time. A decrease in leverage indicates reduced financial risk, thus adding 1 point if leverage decreases.

Historical leverage of NextEra Energy (NEE)

In 2022, NextEra Energy (NEE) had a leverage ratio of 0.3477, while in 2023, it slightly declined to 0.346. Observing this minor decrease, NEE earns a point as lower leverage is typically favorable as it reflects reduced financial risk. Reviewing a 20-year leverage history reveals fluctuations, peaking at 0.3639 in 2011 and dipping to 0.2583 in 2018. The recent decline from 0.3477 to 0.346 suggests a cautious approach towards leveraging, contributing positively towards the overall financial health assessment.

Current Ratio is growing?

Current Ratio assesses a company's efficiency in paying back its short-term liabilities with its short-term assets. A higher ratio indicates a better liquidity position, which is crucial for a company's day-to-day operations without facing a liquidity crunch.

Historical Current Ratio of NextEra Energy (NEE)

NextEra Energy's (NEE) Current Ratio has increased from 0.5053 in 2022 to 0.5493 in 2023, reflecting a minor improvement in its short-term liquidity. This increase is documented amidst a backdrop where the industry median dropped slightly from 0.818 in 2022 to 0.7878 in 2023. Nonetheless, NEE's current ratio continues to lag behind the industry median, indicating room for improvement, despite this positive trend. Given the increase, we award 1 point for this criterion.

Number of shares not diluted?

Change in shares outstanding reflects the company's approach to capital structure, impacting existing shareholder value.

Historical outstanding shares of NextEra Energy (NEE)

The number of outstanding shares of NextEra Energy (NEE) increased from 1,972,600,000 in 2022 to 2,026,100,000 in 2023. This represents an increase of approximately 2.71%. The consistent rise in outstanding shares over the last two decades, culminating in the 2023 figures, suggests that NextEra Energy has possibly utilized equity financing recurrently, potentially diluting the value for existing shareholders. Given that an increase in outstanding shares generally signifies dilution, the score for this criterion would be 0.

Operating of NextEra Energy (NEE)

Cross Margin is growing?

Gross Margin is a measure of a company's operational efficiency and financial health, representing the percentage of revenue exceeding the cost of goods sold.

Historical gross margin of NextEra Energy (NEE)

NextEra Energy's (NEE) gross margin increased from 0.4838 in 2022 to 0.6394 in 2023. This significant increase is a positive indicator of the company's improved efficiency in generating revenue relative to its cost of goods sold. Moreover, this upwards trajectory, given the broader historical context, shows a deviation from the prior year's declining trend and aligns well above industry median Gross Margins which have shown a general downwards trend in the past decade.

Asset Turnover Ratio is growing?

Change in Asset Turnover measures how efficiently a company uses its assets to generate sales. An increase indicates better efficiency; a decrease suggests the opposite.

Historical asset turnover ratio of NextEra Energy (NEE)

NextEra Energy's (NEE) Asset Turnover has increased from 0.1398 in 2022 to 0.1671 in 2023. This positive trend, reflected by a 19.65% jump, adds 1 point under the Piotroski F-Score. Historically, since 2003, the Asset Turnover ratio has generally been on a declining trend, peaking at 0.4554 in 2006 and reaching a low of 0.1271 in 2021. The 2023 figure marks an encouraging deviation from this downtrend. This improvement suggests enhanced efficiency in using its assets to generate revenue recently.


Obligatory risk notice

We would like to point out that the contents of this website are for general information purposes only and do not constitute recommendations for the purchase or sale of specific financial instruments, and therefore do not constitute investment advice. In particular, marketstorylabs.com and its creators cannot assess the extent to which information / recommendations made on the pages correspond to your investment objectives, your risk tolerance and your ability to bear losses. Therefore, if you make any investment decisions based on information on the site, you do so solely on your own responsibility and at your own risk. This in turn means that neither marketstorylabs.com nor its creators are liable for any losses incurred as a result of investment decisions based on the information on the marketstorylabs.com website or other media used.