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Why NextEra Energy Stock Tumbled Today

What happened

Shares of NextEra Energy (NYSE: NEE) had declined more than 8% by 3:45 p.m. ET on Tuesday. Weighing on the utility's stock price was news of its management succession plan. That caused investors to overlook its strong fourth-quarter results and improved long-term outlook.

So what

NextEra Energy announced a series of senior leadership appointments that will take effect on March 1. The company named John Ketchum as its CEO. The 19-year company veteran will replace longtime CEO Jim Robo, who will become executive chairman for a transition period. Ketchum previously served as chief financial officer (CFO) and the CEO of its energy resources segment.

The utility also named its current CFO as the new president of its energy resources segment while promoting that segment's vice president of business development to the CFO role. NextEra made these moves to pave the way for a new generation of leadership.

Image source: Getty Images.

The utility also reported its fourth-quarter results. It posted another strong quarter, enabling it to grow its full-year adjusted earnings per share (EPS) by 10.4%. It benefited from new renewable energy investments in its Florida utility and its energy resources segment.

NextEra Energy also announced its financial expectations for the next several years. The utility increased its earnings growth forecast for 2022, projecting another year of double-digit increases. It also boosted its 2023 outlook and extended its earnings growth forecast through 2025. It now sees 6% to 8% annual EPS growth from 2022's midpoint through 2025.

Now what

NextEra Energy seemed to surprise investors by unveiling its leadership succession plan. Current CEO James Robo had held that job for a decade. He helped lead the company to deliver 9% annual earnings growth during that time, significantly outpacing the 3% average growth rate of its 10 largest rivals. That outsize growth helped power market-crushing total returns for shareholders.

However, he's leaving the company in good hands and in a strong position for the future. NextEra sees accelerated growth over the next couple of years, with excellent visibility through 2025. That growth should create more value for investors over the coming years.

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Matthew DiLallo owns NextEra Energy. The Motley Fool recommends NextEra Energy. The Motley Fool has a disclosure policy.


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