Intrinsic value of NextEra Energy - NEE

Previous Close

$149.98

  Intrinsic Value

$71.18

stock screener

  Rating & Target

str. sell

-53%

  Value-price divergence*

-61%

Previous close

$149.98

 
Intrinsic value

$71.18

 
Up/down potential

-53%

 
Rating

str. sell

 
Value-price divergence*

-61%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of NEE stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 70.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -7.61
  3.60
  3.74
  3.87
  3.98
  4.08
  4.17
  4.26
  4.33
  4.40
  4.46
  4.51
  4.56
  4.60
  4.64
  4.68
  4.71
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.93
Revenue, $m
  16,155
  16,737
  17,363
  18,034
  18,751
  19,517
  20,331
  21,197
  22,114
  23,087
  24,116
  25,204
  26,354
  27,567
  28,847
  30,197
  31,620
  33,119
  34,698
  36,360
  38,109
  39,949
  41,886
  43,922
  46,064
  48,316
  50,683
  53,171
  55,786
  58,535
  61,423
Variable operating expenses, $m
 
  12,301
  12,761
  13,255
  13,782
  14,345
  14,943
  15,579
  16,254
  16,969
  17,725
  18,525
  19,370
  20,262
  21,203
  22,195
  23,241
  24,342
  25,503
  26,724
  28,010
  29,363
  30,786
  32,283
  33,857
  35,512
  37,252
  39,081
  41,003
  43,023
  45,146
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  11,547
  12,301
  12,761
  13,255
  13,782
  14,345
  14,943
  15,579
  16,254
  16,969
  17,725
  18,525
  19,370
  20,262
  21,203
  22,195
  23,241
  24,342
  25,503
  26,724
  28,010
  29,363
  30,786
  32,283
  33,857
  35,512
  37,252
  39,081
  41,003
  43,023
  45,146
Operating income, $m
  4,608
  4,435
  4,601
  4,779
  4,969
  5,172
  5,388
  5,617
  5,860
  6,118
  6,391
  6,679
  6,984
  7,305
  7,645
  8,002
  8,379
  8,777
  9,195
  9,635
  10,099
  10,587
  11,100
  11,639
  12,207
  12,804
  13,431
  14,090
  14,783
  15,512
  16,277
EBITDA, $m
  7,985
  5,028
  5,216
  5,417
  5,633
  5,863
  6,107
  6,367
  6,643
  6,935
  7,244
  7,571
  7,917
  8,281
  8,666
  9,071
  9,499
  9,949
  10,423
  10,922
  11,448
  12,001
  12,582
  13,194
  13,838
  14,514
  15,225
  15,973
  16,758
  17,584
  18,451
Interest expense (income), $m
  1,193
  1,152
  1,246
  1,343
  1,448
  1,560
  1,679
  1,805
  1,940
  2,083
  2,234
  2,394
  2,563
  2,742
  2,931
  3,130
  3,340
  3,562
  3,795
  4,040
  4,299
  4,571
  4,857
  5,159
  5,475
  5,809
  6,159
  6,527
  6,914
  7,321
  7,749
Earnings before tax, $m
  4,388
  3,283
  3,355
  3,436
  3,521
  3,612
  3,709
  3,812
  3,920
  4,035
  4,157
  4,285
  4,420
  4,563
  4,714
  4,872
  5,039
  5,215
  5,400
  5,595
  5,800
  6,016
  6,242
  6,481
  6,732
  6,995
  7,272
  7,563
  7,869
  8,191
  8,528
Tax expense, $m
  1,383
  886
  906
  928
  951
  975
  1,001
  1,029
  1,059
  1,090
  1,122
  1,157
  1,193
  1,232
  1,273
  1,315
  1,361
  1,408
  1,458
  1,511
  1,566
  1,624
  1,685
  1,750
  1,818
  1,889
  1,963
  2,042
  2,125
  2,211
  2,303
Net income, $m
  2,912
  2,396
  2,449
  2,508
  2,571
  2,637
  2,708
  2,783
  2,862
  2,946
  3,034
  3,128
  3,227
  3,331
  3,441
  3,557
  3,679
  3,807
  3,942
  4,084
  4,234
  4,391
  4,557
  4,731
  4,914
  5,106
  5,309
  5,521
  5,744
  5,979
  6,226

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,292
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  89,993
  91,959
  95,399
  99,087
  103,030
  107,235
  111,710
  116,464
  121,508
  126,851
  132,505
  138,484
  144,800
  151,467
  158,501
  165,919
  173,736
  181,973
  190,646
  199,778
  209,389
  219,502
  230,141
  241,331
  253,098
  265,470
  278,477
  292,149
  306,518
  321,620
  337,489
Adjusted assets (=assets-cash), $m
  88,701
  91,959
  95,399
  99,087
  103,030
  107,235
  111,710
  116,464
  121,508
  126,851
  132,505
  138,484
  144,800
  151,467
  158,501
  165,919
  173,736
  181,973
  190,646
  199,778
  209,389
  219,502
  230,141
  241,331
  253,098
  265,470
  278,477
  292,149
  306,518
  321,620
  337,489
Revenue / Adjusted assets
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
  0.182
Average production assets, $m
  5,727
  5,925
  6,146
  6,384
  6,638
  6,909
  7,197
  7,504
  7,829
  8,173
  8,537
  8,922
  9,329
  9,759
  10,212
  10,690
  11,193
  11,724
  12,283
  12,871
  13,491
  14,142
  14,828
  15,548
  16,307
  17,104
  17,942
  18,823
  19,748
  20,721
  21,744
Working capital, $m
  -3,510
  -1,674
  -1,736
  -1,803
  -1,875
  -1,952
  -2,033
  -2,120
  -2,211
  -2,309
  -2,412
  -2,520
  -2,635
  -2,757
  -2,885
  -3,020
  -3,162
  -3,312
  -3,470
  -3,636
  -3,811
  -3,995
  -4,189
  -4,392
  -4,606
  -4,832
  -5,068
  -5,317
  -5,579
  -5,853
  -6,142
Total debt, $m
  30,840
  31,950
  34,447
  37,125
  39,988
  43,040
  46,289
  49,741
  53,403
  57,282
  61,387
  65,727
  70,313
  75,153
  80,260
  85,645
  91,321
  97,300
  103,597
  110,227
  117,205
  124,547
  132,270
  140,394
  148,937
  157,919
  167,362
  177,288
  187,720
  198,684
  210,205
Total liabilities, $m
  65,652
  66,762
  69,259
  71,937
  74,800
  77,852
  81,101
  84,553
  88,215
  92,094
  96,199
  100,539
  105,125
  109,965
  115,072
  120,457
  126,133
  132,112
  138,409
  145,039
  152,017
  159,359
  167,082
  175,206
  183,749
  192,731
  202,174
  212,100
  222,532
  233,496
  245,017
Total equity, $m
  24,341
  25,197
  26,139
  27,150
  28,230
  29,382
  30,609
  31,911
  33,293
  34,757
  36,306
  37,945
  39,675
  41,502
  43,429
  45,462
  47,604
  49,860
  52,237
  54,739
  57,373
  60,144
  63,059
  66,125
  69,349
  72,739
  76,303
  80,049
  83,986
  88,124
  92,472
Total liabilities and equity, $m
  89,993
  91,959
  95,398
  99,087
  103,030
  107,234
  111,710
  116,464
  121,508
  126,851
  132,505
  138,484
  144,800
  151,467
  158,501
  165,919
  173,737
  181,972
  190,646
  199,778
  209,390
  219,503
  230,141
  241,331
  253,098
  265,470
  278,477
  292,149
  306,518
  321,620
  337,489
Debt-to-equity ratio
  1.267
  1.270
  1.320
  1.370
  1.420
  1.460
  1.510
  1.560
  1.600
  1.650
  1.690
  1.730
  1.770
  1.810
  1.850
  1.880
  1.920
  1.950
  1.980
  2.010
  2.040
  2.070
  2.100
  2.120
  2.150
  2.170
  2.190
  2.210
  2.240
  2.250
  2.270
Adjusted equity ratio
  0.265
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,912
  2,396
  2,449
  2,508
  2,571
  2,637
  2,708
  2,783
  2,862
  2,946
  3,034
  3,128
  3,227
  3,331
  3,441
  3,557
  3,679
  3,807
  3,942
  4,084
  4,234
  4,391
  4,557
  4,731
  4,914
  5,106
  5,309
  5,521
  5,744
  5,979
  6,226
Depreciation, amort., depletion, $m
  3,377
  592
  615
  638
  664
  691
  720
  750
  783
  817
  854
  892
  933
  976
  1,021
  1,069
  1,119
  1,172
  1,228
  1,287
  1,349
  1,414
  1,483
  1,555
  1,631
  1,710
  1,794
  1,882
  1,975
  2,072
  2,174
Funds from operations, $m
  6,113
  2,989
  3,064
  3,146
  3,234
  3,328
  3,427
  3,533
  3,645
  3,763
  3,888
  4,020
  4,160
  4,307
  4,462
  4,626
  4,798
  4,979
  5,170
  5,371
  5,583
  5,806
  6,040
  6,286
  6,545
  6,817
  7,103
  7,403
  7,719
  8,051
  8,400
Change in working capital, $m
  -223
  -58
  -63
  -67
  -72
  -77
  -81
  -87
  -92
  -97
  -103
  -109
  -115
  -121
  -128
  -135
  -142
  -150
  -158
  -166
  -175
  -184
  -194
  -204
  -214
  -225
  -237
  -249
  -262
  -275
  -289
Cash from operations, $m
  6,336
  3,047
  3,126
  3,213
  3,306
  3,404
  3,509
  3,619
  3,737
  3,860
  3,991
  4,129
  4,275
  4,428
  4,590
  4,761
  4,940
  5,129
  5,328
  5,538
  5,758
  5,990
  6,233
  6,490
  6,759
  7,042
  7,340
  7,652
  7,981
  8,326
  8,689
Maintenance CAPEX, $m
  0
  -573
  -592
  -615
  -638
  -664
  -691
  -720
  -750
  -783
  -817
  -854
  -892
  -933
  -976
  -1,021
  -1,069
  -1,119
  -1,172
  -1,228
  -1,287
  -1,349
  -1,414
  -1,483
  -1,555
  -1,631
  -1,710
  -1,794
  -1,882
  -1,975
  -2,072
New CAPEX, $m
  -4,240
  -198
  -222
  -238
  -254
  -271
  -288
  -306
  -325
  -344
  -364
  -385
  -407
  -430
  -453
  -478
  -504
  -531
  -559
  -588
  -619
  -652
  -685
  -721
  -758
  -797
  -838
  -881
  -926
  -973
  -1,022
Cash from investing activities, $m
  -8,110
  -771
  -814
  -853
  -892
  -935
  -979
  -1,026
  -1,075
  -1,127
  -1,181
  -1,239
  -1,299
  -1,363
  -1,429
  -1,499
  -1,573
  -1,650
  -1,731
  -1,816
  -1,906
  -2,001
  -2,099
  -2,204
  -2,313
  -2,428
  -2,548
  -2,675
  -2,808
  -2,948
  -3,094
Free cash flow, $m
  -1,774
  2,276
  2,312
  2,361
  2,414
  2,470
  2,530
  2,593
  2,661
  2,733
  2,809
  2,890
  2,976
  3,066
  3,161
  3,262
  3,368
  3,479
  3,597
  3,721
  3,852
  3,989
  4,134
  4,286
  4,446
  4,614
  4,791
  4,977
  5,173
  5,378
  5,594
Issuance/(repayment) of debt, $m
  2,079
  2,402
  2,497
  2,678
  2,863
  3,053
  3,249
  3,452
  3,661
  3,879
  4,105
  4,340
  4,585
  4,841
  5,107
  5,385
  5,676
  5,979
  6,297
  6,630
  6,978
  7,342
  7,724
  8,124
  8,543
  8,982
  9,443
  9,926
  10,432
  10,964
  11,521
Issuance/(repurchase) of shares, $m
  537
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  4,107
  2,402
  2,497
  2,678
  2,863
  3,053
  3,249
  3,452
  3,661
  3,879
  4,105
  4,340
  4,585
  4,841
  5,107
  5,385
  5,676
  5,979
  6,297
  6,630
  6,978
  7,342
  7,724
  8,124
  8,543
  8,982
  9,443
  9,926
  10,432
  10,964
  11,521
Total cash flow (excl. dividends), $m
  2,333
  4,679
  4,809
  5,039
  5,276
  5,523
  5,779
  6,045
  6,323
  6,612
  6,915
  7,231
  7,561
  7,906
  8,268
  8,647
  9,043
  9,459
  9,894
  10,351
  10,829
  11,331
  11,857
  12,410
  12,989
  13,596
  14,234
  14,903
  15,605
  16,342
  17,115
Retained Cash Flow (-), $m
  -1,767
  -856
  -942
  -1,011
  -1,080
  -1,152
  -1,226
  -1,303
  -1,382
  -1,464
  -1,549
  -1,638
  -1,731
  -1,827
  -1,927
  -2,032
  -2,142
  -2,257
  -2,377
  -2,502
  -2,633
  -2,771
  -2,915
  -3,066
  -3,224
  -3,390
  -3,564
  -3,746
  -3,937
  -4,138
  -4,348
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  3,823
  3,867
  4,028
  4,196
  4,370
  4,552
  4,742
  4,941
  5,148
  5,365
  5,592
  5,830
  6,079
  6,341
  6,614
  6,901
  7,202
  7,518
  7,849
  8,196
  8,560
  8,942
  9,344
  9,765
  10,206
  10,670
  11,157
  11,668
  12,204
  12,767
Discount rate, %
 
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.85
  11.40
  11.97
  12.57
  13.19
  13.85
  14.55
  15.27
  16.04
  16.84
  17.68
  18.57
  19.49
  20.47
  21.49
  22.57
  23.69
  24.88
  26.12
  27.43
  28.80
  30.24
  31.75
  33.34
PV of cash for distribution, $m
 
  3,536
  3,284
  3,116
  2,932
  2,733
  2,523
  2,305
  2,084
  1,861
  1,643
  1,431
  1,229
  1,040
  867
  710
  572
  452
  351
  266
  198
  144
  102
  70
  47
  31
  20
  12
  7
  4
  2
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

NextEra Energy, Inc., through its subsidiaries, generates, transmits, and distributes electric power to retail and wholesale customers in North America. The company generates electricity through wind, solar, nuclear, and natural gas-fired facilities. It also provides risk management services related to power and gas consumption. As of December 31, 2016, it served approximately 10 million people through approximately 4.9 million customer accounts in the east and lower west coasts of Florida. The company had approximately 45,900 megawatts of generating capacity. The company was formerly known as FPL Group, Inc. and changed its name to NextEra Energy, Inc. in 2010. NextEra Energy, Inc. was founded in 1984 and is headquartered in Juno Beach, Florida.

FINANCIAL RATIOS  of  NextEra Energy (NEE)

Valuation Ratios
P/E Ratio 24.1
Price to Sales 4.3
Price to Book 2.9
Price to Tangible Book
Price to Cash Flow 11.1
Price to Free Cash Flow 33.5
Growth Rates
Sales Growth Rate -7.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 9.5%
Cap. Spend. - 3 Yr. Gr. Rate 5.6%
Financial Strength
Quick Ratio 0
Current Ratio 0.2
LT Debt to Equity 114.3%
Total Debt to Equity 126.7%
Interest Coverage 5
Management Effectiveness
Return On Assets 4.3%
Ret/ On Assets - 3 Yr. Avg. 4.5%
Return On Total Capital 5.4%
Ret/ On T. Cap. - 3 Yr. Avg. 5.4%
Return On Equity 12.4%
Return On Equity - 3 Yr. Avg. 12.8%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 55.5%
EBITDA Margin - 3 Yr. Avg. 49.5%
Operating Margin 28.5%
Oper. Margin - 3 Yr. Avg. 26.9%
Pre-Tax Margin 27.2%
Pre-Tax Margin - 3 Yr. Avg. 23.8%
Net Profit Margin 18%
Net Profit Margin - 3 Yr. Avg. 16.1%
Effective Tax Rate 31.5%
Eff/ Tax Rate - 3 Yr. Avg. 31.5%
Payout Ratio 55.4%

NEE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NEE stock intrinsic value calculation we used $16155 million for the last fiscal year's total revenue generated by NextEra Energy. The default revenue input number comes from 2016 income statement of NextEra Energy. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our NEE stock valuation model: a) initial revenue growth rate of 3.6% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.1%, whose default value for NEE is calculated based on our internal credit rating of NextEra Energy, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of NextEra Energy.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of NEE stock the variable cost ratio is equal to 73.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for NEE stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.9% for NextEra Energy.

Corporate tax rate of 27% is the nominal tax rate for NextEra Energy. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the NEE stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for NEE are equal to 35.4%.

Life of production assets of 10 years is the average useful life of capital assets used in NextEra Energy operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for NEE is equal to -10%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $24341 million for NextEra Energy - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 471.679 million for NextEra Energy is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of NextEra Energy at the current share price and the inputted number of shares is $70.7 billion.

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COMPANY NEWS

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Stock chart of NEE Financial statements of NEE
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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