NEXTERA ENERGY, INC. (NEE): what the price requires
At today's price, NEXTERA ENERGY, INC. (NEE) is priced for +12.4% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-13 · Source: https://boothcheck.com/report/NEE
Headline
| Field | Value |
|---|---|
| Ticker | NEE |
| Company | NEXTERA ENERGY, INC. |
| Current price | $88.38/sh |
| Composition | FPL (Florida Power & Light) 68% / NEER (NextEra Energy Resources) 32% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin today | 34.4% |
| Implied growth | 12.4% |
| Multiple paid | 34x operating income |
Solve inputs: computed at a 6.9% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~9.9pp.
Reconcile: at the x-ray's 9.3% required return this reads ~7 years; the models below use their own rates.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +0.25σ |
| cohort percentile (of 70 peers) | 89 |
| sustained it ~5 years at this level | 53% |
| implied end-window share | 0% |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.75x | 4 | expensive |
| Earnings | 2.08x | 3 | expensive |
| Relative | 1.44x | 5 | expensive |
| Growth | 0.86x | 4 | justifies |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.4%); the inversion above states its own rate.
Per-Model Detail (n=16)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $183.24 | 0.48x | yes | FCF base $13.3B, growth 11% (input: historical growth), terminal g 4.0%, WACC 7.4%, 6yr projection |
| DCF Exit Multiple | Growth | $124.44 | 0.71x | yes | Exit EV/EBITDA: 27.4x / 29.4x / 31.4x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $61.27 | 1.44x | yes | P/E 20x (sector median), scenarios: 16.6x / 20.0x / 23.4x (bear / base = sector held flat / bull), EV/EBITDA 17.92x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | $88.13 | 1.00x | yes | Stage 1: 20% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $42.28 | 2.09x | yes | BV/sh $26.39, ROE (TTM) 14.8%, ke 9.3% |
| Two-Stage Excess Return | Asset | $52.90 | 1.67x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $79.47 | 1.11x | yes | Rev $27.9B, growth 11% (input: historical growth; tapered), Terminal P/S: 5.5x / 6.6x / 7.8x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $137.90 | 0.64x | yes | EPS $3.94, growth 35% (input: historical EPS growth), PEG=0.65 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $0.01 | 8838.00x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $6.91B × (1−21%) / WACC 7.4% → EPV (no growth) (excluded from median) |
| Residual Income | Asset | $54.34 | 1.63x | yes | BV $26.39 + 5yr PV of (ROE (TTM) 14.8% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $48.37 | 1.83x | yes | √(22.5 × EPS $3.94 × BVPS $26.39) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $13.16 | 6.72x | yes | EBITDA $9.60B × sector EV/EBITDA 13.0x |
| FCF Yield | Earnings | $17.20 | 5.14x | yes | FCF $12330.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $127.13 | 0.70x | yes | EPS $3.94 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $4.08 | 21.66x | yes | BV $26.39 × (ROIC 1.1% / WACC 7.4%) (excluded from median) |
| P/Sales Sector | Relative | $33.29 | 2.65x | yes | Revenue $27.87B × sector P/S 2.5x |
| PEG Fair Value | Relative | $147.75 | 0.60x | yes | EPS $3.94 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $42.59 | 2.08x | yes | EPS $3.94 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $101.1b |
| Net debt / NOPAT (after-tax) | 14.38x |
| Net debt / operating income (pre-tax) | 11.36x |
| Share count CAGR (dilution) | 1.5% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
NextEra Energy is two businesses in one: Florida Power & Light, a regulated utility at about 68% of the mix, and NextEra Energy Resources, the largest renewables developer in the country, at roughly 32%. What a simple multiple misses is that both grow by deploying capital into a rate base or a contracted project, which a backward-looking earnings frame cannot fully credit.
At $86.74 (as of June 27, 2026) the price pays about 34x company-wide operating income, implying roughly 12% operating growth per year, a high rate for a utility, and the multiple sits at the very top of the peer distribution. The static valuation families call the stock expensive while only the forward growth method reaches the price.
The defining feature is leverage by design: net debt of about $101 billion against $8.2 billion of trailing operating income. That is normal for a rate-base utility funded with cheap debt, but it makes the company unusually sensitive to interest rates, the variable that most directly moves both its cost of capital and its valuation.
Bull Case
What a standard earnings multiple misses about NextEra is that its growth is manufactured by capital deployment into assets that earn a regulated or contracted return, not by winning a competitive market each year. At FPL, the company invests in the rate base and recovers those investments through the ratemaking process, with regulatory assets representing future revenues to be collected from customers (FY2025 10-K, accession 0000753308-26-000015). In the most recent quarter FPL invested about $3.2 billion and grew its regulatory capital employed by roughly 8.8%, all while keeping customer bills about 30% below the national average. A utility that can pour billions into its rate base, earn a return on it, and still charge below-average rates has a self-reinforcing growth machine that a static valuation frame structurally undervalues.
The renewables arm is the second engine, and it is running at record scale. NextEra Energy Resources added 4 gigawatts of new renewables and storage in the quarter, including 1.3 GW of battery storage, lifting its development backlog to roughly 33 GW. That backlog is contracted, long-duration capacity that converts into earnings as projects come online, the renewables analog of FPL's rate base. The demand pull is intensifying: FPL reported about 21 GW of interest from large-load projects, with advanced discussions on 12 GW targeted to begin service in 2028, the data-center and electrification wave landing directly on its grid.
The results and the commitments tie it together. Q1 2026 adjusted EPS rose 10% to $1.09, beating expectations, and the company reiterated 2026 adjusted EPS guidance of $3.92 to $4.02, targets an 8%-plus adjusted EPS compound growth rate through 2032, and plans roughly 10% annual dividend growth through 2026. A regulated utility plus the largest renewables platform, both growing on contracted economics with a credible multi-year EPS and dividend roadmap, is exactly the durable compounding the growth-DCF frame is pricing and the static methods cannot.
Bear Case
When the valuation methods disagree this sharply, the conservative ones are usually the more honest read, and for NextEra they are flashing the same warning. The asset-based and earnings-power frames both call the stock expensive, while only the forward growth-DCF reaches the price, and the implied multiple sits at the very top of the peer distribution, well beyond the upper quartile. The growth-DCF only gets there by assuming about 12% operating growth holds for years, a demanding rate for any utility, and the static frames are effectively saying that today's price has already capitalized the renewables and rate-base story to its limit.
The external variable that most threatens that read is interest rates. NextEra funds its growth with roughly $101 billion of net debt, about 12x trailing operating income, which is the model working as designed for a rate-base utility, but it makes the company acutely rate-sensitive. The inversion itself runs on a low cost of capital near 7%, and the implied growth is highly sensitive to it, with each point of cost of capital moving the implied growth by nearly 10 points. If rates stay higher for longer, NextEra's borrowing costs rise, the present value of its long-dated projects falls, and the premium multiple that the growth-DCF justifies compresses. A utility this leveraged is a bond-proxy with a growth overlay, and bond proxies de-rate when yields climb.
The execution risk compounds the rate risk. A 33 GW backlog and 12 GW of advanced large-load discussions targeted for 2028 are impressive, but they require enormous, sustained capital deployment, supportive regulation, supply chains, and interconnection that all have to go right over multiple years. Any change in tax-credit policy for renewables, a tougher regulatory rate case in Florida, or a slip in the large-load project timeline would dent the 8%-plus EPS trajectory the price assumes. The bear case is not that NextEra is a poor business, it is that an excellent, capital-intensive one is priced at the top of its group on a low discount rate, leaving it exposed to the single macro variable, interest rates, that it cannot control.
Valuation
At the current price the market is paying about 34x company-wide operating income, which implies operating growth of roughly 12.2% per year over a five-year stage. That solve runs at a cost of capital near 6.9% with 4% terminal growth, and the inversion is very sensitive to that low discount rate, with each point of cost of capital moving the implied growth by about 9.9 points. Keep the figure approximate; it is a single solve, and the low assumed cost of capital is doing a lot of the work in justifying the multiple.
The family pattern is a clear premium with a low-rate dependency. The asset-based and earnings-power methods both read expensive, the multiple sits at the very top of the peer distribution, and only the forward growth-DCF reaches the price. The reverse-DCF range is wide and flagged low reliability, with a base near the mid-$60s and a high end well above the current price, which captures how much the valuation swings on growth and discount-rate assumptions. That wide range is itself a caution: small changes in the inputs move the fair value a long way.
The read is that NextEra is priced for its growth story to play out at a favorable cost of capital. The roughly 12% implied growth is within reach given the rate-base expansion and the 33 GW renewables backlog, and the historical base rate is moderate, about 53% of comparable fast-growers sustained this pace for five years. But the price leans on both the growth continuing and rates staying supportive. If either assumption weakens, particularly the discount rate, the top-of-group multiple has the most room to fall, and the static methods that already call it expensive become the more relevant frame.
Catalysts
The most recent print, Q1 2026 (reported April 2026), beat expectations: adjusted EPS rose 10% to $1.09 against a roughly $0.97 estimate, and net income was $2.182 billion. NextEra Energy Resources added 4 GW of renewables and storage, including 1.3 GW of battery storage, lifting the development backlog to a record of about 33 GW, while FPL invested about $3.2 billion and grew regulatory capital roughly 8.8%.
The forward catalysts are the backlog conversion and the large-load demand pipeline. FPL reported about 21 GW of large-load project interest with advanced discussions on 12 GW targeted to begin service in 2028, the clearest sign of the data-center and electrification demand landing on the grid. The pace at which the 33 GW renewables backlog comes online, and additions to it, is the recurring driver of the renewables segment.
The company reiterated 2026 adjusted EPS guidance of $3.92 to $4.02, an 8%-plus adjusted EPS CAGR target through 2032, and dividend growth of roughly 10% annually through 2026 and 6% thereafter through 2028, so the guidance roadmap frames the catalysts. The dominant watch items are interest rates, renewables tax-credit and regulatory policy, the Florida rate environment, and execution on the large-load timeline. Continued backlog growth and on-track EPS would support the premium; a rate shock or a policy or regulatory setback would pressure it. Sources: NextEra Energy Q1 2026 results and guidance (stocktitan.net; investing.com; tikr.com), April 2026.
Peer Cohorts (Per Segment, With Filing Citations)
FPL (Florida Power & Light) (reported)
- SO (SOUTHERN CO)
- (no filing in the citation store)
- DUK (DUKE ENERGY CORPORATION)
- (no filing in the citation store)
- AEP (AMERICAN ELECTRIC POWER CO INC.)
- (no filing in the citation store)
- D (DOMINION ENERGY, INC)
- (no filing in the citation store)
- XEL (XCEL ENERGY INC)
- (no filing in the citation store)
- WEC (WEC ENERGY GROUP, INC.)
- (no filing in the citation store)
- ED (CONSOLIDATED EDISON INC)
- (no filing in the citation store)
- PPL (PPL Corp)
- (no filing in the citation store)
NEER (NextEra Energy Resources) (reported)
- CEG (CONSTELLATION ENERGY CORPORATION)
- (no filing in the citation store)
- VST (Vistra Corp.)
- (no filing in the citation store)
- NRG (NRG Energy, Inc)
- (no filing in the citation store)
- AES (AES CORP)
- (no filing in the citation store)
- TLN (Talen Energy Corporation)
- (no filing in the citation store)
- CWEN (Clearway Energy, Inc.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.