NextEra Energy Partners, LP (NEP) Stock Valuation — PE Analysis
Renewable Utilities · NYSE
Current Price
$10.54
PE Ratio (TTM)
4.8x
Intrinsic Value
$17.54
+39.9% margin of safety
COMPETITIVE MOAT
↑Long-term contracted cash flows
NEP's portfolio of renewable energy assets operates under long-term power purchase agreements. This provides predictable revenue streams and insulates it from short-term energy price volatility.
↑Scale and operational expertise
As a leading owner of contracted renewable energy projects, NEP benefits from economies of scale in development, construction, and operations. This expertise drives efficiency and cost advantages.
↑Sponsor relationship with NextEra Energy
The relationship with its sponsor, NextEra Energy, provides NEP with access to a pipeline of high-quality development projects and operational support. This is a significant competitive advantage.
INVESTMENT RISKS
↓Project execution and performance
NEP's profitability is tied to the successful construction and ongoing operational performance of its renewable energy projects. Underperformance or delays can negatively impact cash flows.
↓Counterparty risk in PPAs
The financial health of the entities purchasing power under NEP's long-term contracts is crucial. Defaults or financial distress of these counterparties could disrupt revenue streams.
↓Competition for development opportunities
While NEP has a strong sponsor, the renewable energy development space is competitive. Securing attractive new projects at favorable terms may become more challenging.
Base case
NEP base case PE valuation
At a current price of $10.54, the base case PE valuation puts NEP fair value near $17.54 per share. That figure assumes 4.1% yearly earnings growth, a target PE multiple of 5x, and a 10% discount rate.
Intrinsic Value
$17.54
Margin of safety
+39.9%
Expected annual return
+10.7%
Base case assumptions: 4.1% annual earnings growth, 5x target PE, 10% discount rate, 5 year projection. Data as of 2025-01-31.
This base case uses default assumptions and is not financial advice. The fair value changes significantly when the target PE or earnings growth rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the NEP PE valuation
Adjust the target PE, earnings growth, and discount rate to see how the fair value and margin of safety for NextEra Energy Partners, LP respond.
Open PE Calculator for NEPCompany Overview
NextEra Energy Partners, LP (NEP) specializes in the development, ownership, and management of sustainable energy infrastructure located throughout the United States, all operating under long-term agreements. The company's diverse portfolio primarily encompasses contracted wind and solar power generation facilities, along with similarly contracted natural gas pipeline assets. Established in 2014, NextEra Energy Partners, LP maintains its headquarters in Juno Beach, Florida.
Financial Metrics — NEP PE Stock Valuation Data
PE Ratio (TTM)
4.8x
PEG Ratio
0.00
Earnings Yield
20.72%
ROE (TTM)
5.8%
Revenue/Share (TTM)
$11.77
Dividend Yield
34.11%
Debt/Equity
1.77x
Frequently Asked Questions
What is the PE ratio of NEP?
The trailing twelve-month PE ratio of NEP reflects how much investors pay per dollar of NextEra Energy Partners, LP's earnings. This metric is most useful when compared to Renewable Utilities peers and the company's own historical range.
Is NEP overvalued based on PE ratio?
NEP's PE of 4.8x combined with a PEG ratio of 0.00 provides a growth-adjusted perspective. A PEG below 1.0 means the P/E is low relative to the earnings growth rate. Keep in mind that PE-based valuation works best for profitable, mature companies — for high-growth or cyclical Renewable Utilities, a DCF analysis may be more appropriate.
How do I value NEP stock using PE ratio?
To value NextEra Energy Partners, LP using PE: (1) Compare the current PE (4.8x) against the Renewable Utilities median to assess relative pricing, (2) check the PEG ratio (0.00) to adjust for growth expectations, (3) review the 5-year PE range to identify where the stock sits historically, and (4) estimate fair value by multiplying a target PE by forward EPS estimates. This relative approach complements DCF's absolute valuation.
What is the PEG ratio of NEP?
NEP's PEG ratio is 0.00, calculated by dividing the PE ratio (4.8x) by the expected earnings growth rate. A PEG below 1.0 means the P/E is low relative to the expected earnings growth rate. Note that PEG accuracy depends on the reliability of growth estimates.
Should I use PE ratio or DCF for NEP stock valuation?
PE ratio gives a quick relative read — how NEP is priced versus Renewable Utilities peers. DCF provides an absolute value based on projected free cash flows. For the most reliable valuation, use PE as a quick comparability screen and DCF for a deeper fundamental analysis. Each method has blind spots: PE ignores capital structure and cash flow quality, while DCF is sensitive to growth and discount rate assumptions.
Learn More
- See NEP DCF Valuation → — Intrinsic value via Discounted Cash Flow analysis
- PE Methodology — Step-by-step guide to PE ratio stock valuation
- DCF Methodology — Guide to discounted cash flow analysis
- PE Ratio — Understanding the price-to-earnings ratio
- Intrinsic Value — How to evaluate stock fair value
Related PE Valuations
All Utilities valuationsP/E and DCF value NEP with different methods and assumptions, so the two conclusions can differ. Compare the DCF intrinsic value.
Price as of 2025-01-31. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.