NEE Analysis: NextEra Energy Trades Within 3% of Its 52-Week High as AI Data Center Demand Supercharges America's Largest Clean Energy Utility

NextEra Energy trades at 27.9x trailing earnings, 3.1x book value, and an enterprise value of $260.5 billion — roughly 67.9x EBITDA. By every traditional valuation metric, NEE is expensive relative to the utility sector, where the average P/E sits around 16-18x and EV/EBITDA is typically 10-14x.

The premium is not irrational. NextEra's regulated utility (FPL) serves one of the fastest-growing states in America, while NextEra Energy Resources operates the world's largest portfolio of wind, solar, and battery storage assets. This dual model — stable regulated earnings paired with high-growth renewables — justifies some premium. But at these levels, the stock is pricing in flawless execution for years to come.

The Graham Number — a rough intrinsic value estimate based on earnings and book value — puts fair value at just $20.79 per share, less than a quarter of the current price. While Graham-style analysis understates the value of high-quality growth utilities, the gap underscores how much of NEE's valuation is built on future expectations rather than current fundamentals.

NextEra delivered $27.5 billion in revenue for full-year 2025, with quarterly earnings showing the typical seasonal pattern driven by Florida's summer cooling demand. Q3 2025 was the standout quarter at $7.97 billion in revenue and $1.18 in EPS, while Q1 — traditionally the weakest — came in at $6.25 billion and $0.41 EPS.

Full-year EPS of $3.31 represents solid execution, though the quarter-to-quarter trajectory reveals how weather and renewable energy production timing can swing results. Q4 EPS of $0.73 came in below Q3's $1.18, largely reflecting seasonal demand patterns at FPL and timing of renewable energy deliveries.

Gross margins remain exceptionally strong at 57.5% in Q4, reflecting NEE's asset-heavy business model where fuel costs are largely passed through to ratepayers in the regulated segment. Operating margins of 24.2% and net margins of 23.4% demonstrate the profitability of a business that combines regulated rate recovery with long-term renewable energy contracts.

NextEra's balance sheet tells the story of a company investing at a pace rarely seen outside Big Tech. Total assets reached $212.7 billion at year-end 2025, with property, plant and equipment of $156.2 billion. Total debt stands at $95.6 billion against shareholders' equity of $54.6 billion, producing a debt-to-equity ratio of 1.75x.

The critical context is that regulated utilities operate with structural leverage — they earn allowed returns on their rate base, and debt is a feature, not a bug, of the business model. NextEra's interest coverage of 2.7x is adequate but not generous, and the current ratio of 0.60 means current liabilities exceed current assets, which is typical for utilities that roll short-term commercial paper continuously.

Operating cash flow of $12.5 billion in FY2025 is impressive, but capital expenditures of $24.6 billion — nearly double operating cash flow — produced negative free cash flow of $12.1 billion. This isn't a sign of distress; it's the cost of building the clean energy infrastructure that underpins the growth story. NEE funded the gap through $13.7 billion in net new debt and $2.0 billion in equity issuance.

Dividends of $4.68 billion ($2.25 per share, yielding approximately 2.4%) consumed 88% of net income. While the payout ratio is high, it's sustainable as long as the regulated earnings stream remains stable — and FPL's rate base provides that predictability.

NextEra Energy Resources is the world's largest generator of wind and solar energy, with approximately 33 GW of generating capacity across wind, solar, and battery storage. This positions NEE at the center of two intersecting megatrends: the clean energy transition and the explosive growth in electricity demand from AI data centers.

The AI thesis is straightforward. Large language models, training clusters, and inference workloads are driving unprecedented demand for reliable, scalable power. Hyperscalers like Microsoft, Google, and Amazon have made ambitious clean energy commitments, and NextEra's ability to develop, build, and operate utility-scale renewable projects at massive scale makes it a natural partner. Recent coverage from Motley Fool highlighted NEE's "massive clean energy expansion" as a key driver for long-term investors.

Florida Power & Light adds defensive ballast. FPL serves approximately 5.8 million customer accounts in Florida, one of the fastest-growing states by population. The regulated utility model provides predictable earnings growth through rate base expansion — as NEE invests in grid infrastructure, it earns an allowed return set by regulators.

The competitive moat is scale. Few companies can match NextEra's development pipeline, operational expertise, or access to capital. In a sector where permitting, interconnection queues, and supply chain complexity create barriers to entry, NEE's incumbency is a significant advantage.

Analyst estimates project NextEra's revenue reaching approximately $48 billion by 2030, with EPS growing to roughly $5.46 — implying a compound annual growth rate of around 10-11% from current levels. Those growth rates are exceptional for a utility and reflect the market's expectation that renewable energy deployment will accelerate.

The next earnings report is scheduled for April 22, 2026, which will provide the first look at Q1 2026 results and updated guidance for the year. Management has historically guided to 6-8% adjusted EPS growth, and any acceleration would validate the premium multiple.

Key catalysts include: continued expansion of the renewable energy backlog, new data center power contracts with hyperscalers, favorable regulatory decisions for FPL rate cases, and potential benefits from federal clean energy tax credits that extend the economic viability of wind and solar projects.

Risks are meaningful. Rising interest rates increase the cost of NEE's substantial debt load and make the stock's 2.4% dividend yield less competitive against risk-free Treasury rates. Regulatory risk in Florida could limit FPL's rate base growth. And execution risk is real — deploying $24+ billion in annual capex requires flawless project management across hundreds of sites.

Perhaps the biggest risk is valuation itself. At 28x earnings, the stock leaves little room for disappointment. A single quarter of below-trend growth or a rise in interest rates could trigger a meaningful de-rating.