Earnings Preview: FPL Group's first-quarter profit to jump
NEW YORK—FPL Group Inc., a Florida electric utility that is also the nation's top wind and solar power generator, reports first-quarter earnings Wednesday. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: The Juno Beach, Fla.-based company owns Florida Power & Light, a regulated utility, and FPL Energy, a non-regulated, wholesale generation unit that includes solar, nuclear and wind power. As of Dec. 31, FPL Energy owned about 30 percent of the wind-powered electric generation capacity in the U.S.
On March 27, FPL said it applied to California regulators to build a 250-megawatt solar farm in the Mojave Desert. The two-year construction project is to begin late next year.
A one-megawatt plant running continuously at full capacity can power 778 households each year, according to the U.S. Department of Energy. Solar plants typically have less capacity because they depend on the sun for generation.
On March 18, Florida regulators approved plans by Florida Power & Light to build two new nuclear generators at its Turkey Point facility south of Miami. The utility already operates two nuclear units. If approved by the federal Nuclear Regulatory Commission, and the Florida Power Plant Siting Board, which includes the governor and Cabinet members, the two new generators would come online in 2018 and 2020.
BY THE NUMBERS: Analysts polled by Thomson Financial expect, on average, earnings per share of 80 cents on revenue of $3.55 billion. In the year-earlier period, FPL earned $150 million, or 38 cents per share, on revenue of $3.08 billion.
ANALYST TAKE: Banc of America Securities analyst Shelby G. Tucker said he expects the company to earn 79 cents per share. The positive benefit of a base rate increase due at the company's Turkey Point 5 facility will be somewhat offset by higher costs, he said.
"At FPL Energy we expect new wind assets, Point Beach, and the rollover of existing assets to market conditions to benefit FPL," though the benefit is slightly offset by higher costs, he wrote.
WHAT'S AHEAD: Lehman Brothers analyst Daniel Ford wrote in an April 1 client note that "earnings growth of 10 percent or more seems readily achievable for the next few years if execution continues, spending in Florida in generation could be well received by regulators, and the capital program remains robust. We think the story is among the best in the industry over the short and medium-terms, aligning clean generation with one of the better utilities in the country."
Deutsche Bank's John Kianai said 9 percent earnings growth was reasonable, but also warned the nation's "recessionary environment" may create regulatory headaches for the utility.
STOCK PERFORMANCE: Shares fell 7.4 percent to end the quarter at $62.74. The stock has regained most of that since March 31, ending Friday at $66.63.
