Does Duke Energy Compare Favorably With NextEra Energy?

by Trefis Team
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Duke Energy (NYSE:DUK) is one of the largest electric and gas utilities in the U.S serving about 7.7 million electric customers within the Southeast and Midwest. The company also provides Natural Gas via its Piedmont Natural Gas and Duke Ohio operations. NextEra Energy operates Florida Power and Light (FPL), the largest electric utility in the state of Florida and also has a non-regulated arm called NextEra Energy Resources (NEER) which is one of the world’s largest producers of wind and solar energy. It is the largest U.S. utility company by market cap. In this analysis, we compare how Duke Energy and NextEra compare in terms of key metrics, including Revenues, Customers, Generation Capacity, margins, total debt, and valuation.

View our interactive dashboard analysis on How Does Duke Energy Compare With NextEra Energy?

TAKEAWAY

  • While Duke Energy’s Revenues are higher, NextEra’s Revenue growth is much stronger than Duke’s, averaging over 6% over the last 3 years versus about 3% for Duke.
  • Duke Energy’s Operating margins have been trending lower and are likely to stand at about 20% in 2019, while NextEra’s margins are higher and are projected to stand at levels of ~30%.
  • Duke Energy’s EPS is likely to expand marginally from $4.70 in 2016 to $4.87 in 2019, a CAGR of 1%, while NextEra’s Adjusted EPS is likely to grow from $6.20 to $8.40 in the same period, an increase of over 10% each year.

#1 Revenues: How Duke Energy’ s Revenues Compare With NextEra Energy

Duke Energy’s Revenues are likely to have stood at about $25 billion in 2019., ahead of the $19.3 billion NextEra is likely to post.
However, NextEra’s Revenue growth is much stronger than Duke’s, averaging over 6% versus about 3% for Duke.

#2 Generation Capacity And Fuel Mix

  • Duke Energy’s total generation capacity stood at about 51 gigawatts (GW), compared to about 53 GW for NextEra.
  • In terms of Generation Mix, as a % of units generated in 2018, Duke’s generation was fairly evenly distributed between Natural Gas, Nuclear, and Coal (31% to 34% each), while FPL, NextEra’s Florida utility, is largely dependent on Natural Gas (73%) followed by Nuclear (22%)

#3 Total Customers: Duke has a larger number of customers compared to NextEra’s FPL utility

  • Duke Energy has over 7.7 million customers, compared to about 5 million for FPL.

#4 Margins And Earnings

  • Duke Energy’s Operating margins have been trending lower and are likely to stand at about 20%, while NextEra’s margins are higher and are projected to stand at levels of ~30%.
  • This is likely due to NextEra’s Renewable energy assets and its focus on the fast-growing and population-dense South Florida area.

#5 EPS: While NextEra has been consistently posting high single-digit levels of EPS growth, Duke’s growth has been much lower

Duke Energy’s EPS is likely to expand marginally from $4.70 in 2016 to $4.87 in 2019, a CAGR of 1%.
In comparison, NextEra’s Adjusted EPS is likely to grow from $6.20 to $8.40 in the same period, an increase of over 10% each year.

#6 Total Debt: Duke Energy’s Total Debt stood at $58 billion in 2018, compared to about $38 billion for NextEra

For more details on how Duke’s debt compares with NextEra, view our interactive dashboard analysis How Does Duke Energy Compare With NextEra Energy?

#7 Valuation: Duke Energy trades At 19x 2020 EPS, while NextEra trades at 27x 2020 EPS

  • Duke Energy’s market price of about $90 per share implies that it trades at 18.5x its projected 2020 earnings.
  • In comparison, NextEra’s market price of about $245 implies a P/E multiple of about 27x based on 2020 earnings.
  • NextEra’s higher multiple is due to its stronger revenue growth and margins and lower debt load.

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