Question

relative value for NEE (Nextera energy stock)

Answer 1

Answer:

NextEra energy stock is currently trading at $275. It is an energy company, based in Florida, USA. It is the largest electric utility holding company by the market capitalization.

Relative value id known with the help of P/E ratio. P/E Ratio is price to earnings ratio that tells how much stock is worth. It is the relationship between price of the stock and earning of the stock. It tells how much an investor is paying for a single stock and how much earning, he is getting from the same.

P/E Ratio = Price per share/Earning per share

P/E Ratio of NextEra energy = 264.54 / 7.77

P/E Ratio of NextEra energy = 34.04

(Based on trailing twelve months to Dec. 2019)

This P/E ratio is little higher, a high P/E ratio tells that investors are paying higher price for the stock as compare to its earnings. A high P/E brings expectation for company's revenue. Investors are willing to buy the company's share at high price because they see the future growth and potential in it.