Here's Why NextEra Energy (NYSE:NEE) Has Caught The Eye Of Investors

Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

In contrast to all that, many investors prefer to focus on companies like NextEra Energy (NYSE:NEE), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide NextEra Energy with the means to add long-term value to shareholders.

View our latest analysis for NextEra Energy

How Fast Is NextEra Energy Growing?

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. It certainly is nice to see that NextEra Energy has managed to grow EPS by 30% per year over three years. As a general rule, we'd say that if a company can keep up that sort of growth, shareholders will be beaming.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. NextEra Energy shareholders can take confidence from the fact that EBIT margins are up from 12% to 35%, and revenue is growing. That's great to see, on both counts.

The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

Fortunately, we've got access to analyst forecasts of NextEra Energy's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are NextEra Energy Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

It's pleasing to note that insiders spent US$2.9m buying NextEra Energy shares, over the last year, without reporting any share sales whatsoever. Knowing this, NextEra Energy will have have all eyes on them in anticipation for the what could happen in the near future. It is also worth noting that it was company insider Armando Pimentel who made the biggest single purchase, worth US$996k, paying US$75.44 per share.

Along with the insider buying, another encouraging sign for NextEra Energy is that insiders, as a group, have a considerable shareholding. We note that their impressive stake in the company is worth US$261m. This comes in at 0.2% of shares in the company, which is a fair amount of a business of this size. This still shows shareholders there is a degree of alignment between management and themselves.

Is NextEra Energy Worth Keeping An Eye On?

You can't deny that NextEra Energy has grown its earnings per share at a very impressive rate. That's attractive. Not only that, but we can see that insiders both own a lot of, and are buying more shares in the company. Astute investors will want to keep this stock on watch. Still, you should learn about the 3 warning signs we've spotted with NextEra Energy (including 1 which makes us a bit uncomfortable).

Keen growth investors love to see insider buying. Thankfully, NextEra Energy isn't the only one. You can see a a free list of them here.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.