NextEra Energy Partners, LP (NEP) Stock Valuation — PE Analysis
Renewable Utilities · NYSE
Current Price
$10.54
PE Ratio (TTM)
10.4x
Intrinsic Value
Outside reliable range
COMPETITIVE MOAT
↑Scale and Diversification
NEP benefits from its large, diversified portfolio of contracted renewable energy assets. This scale provides operational efficiencies and reduces reliance on any single project or technology.
↑Long-Term Contracts
The majority of NEP's revenue is secured by long-term power purchase agreements with creditworthy counterparties. These contracts offer predictable cash flows and insulate against short-term market volatility.
↑Sponsorship by NextEra Energy
Being sponsored by NextEra Energy, a leading utility, provides NEP with access to development expertise, capital, and a pipeline of growth opportunities. This relationship is a significant competitive advantage.
INVESTMENT RISKS
↓Interest Rate Sensitivity
As a yield-oriented partnership, NEP is sensitive to rising interest rates. Higher rates increase borrowing costs and can make its distributions less attractive relative to fixed-income alternatives.
↓Regulatory and Policy Changes
Changes in renewable energy policies, tax incentives, or environmental regulations could impact NEP's profitability and growth prospects. The recent merger announcement highlights potential scrutiny on power bills.
↓Project Execution and Operational Risks
NEP faces risks associated with the construction and operation of its renewable energy projects. Delays, cost overruns, or equipment failures can negatively affect financial performance.
Base case
NEP base case PE valuation
Base case assumptions: -19.9% annual earnings growth, 10x 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)
10.4x
PEG Ratio
0.01
Earnings Yield
9.57%
ROE (TTM)
3.3%
Revenue/Share (TTM)
$12.53
Debt/Equity
1.98x
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 10.4x combined with a PEG ratio of 0.01 provides a growth-adjusted perspective. A PEG below 1.0 suggests NEP may be undervalued relative to its 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 (10.4x) against the Renewable Utilities median to assess relative pricing, (2) check the PEG ratio (0.01) 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 0.01, calculated by dividing the PE ratio (10.4x) by the expected earnings growth rate. A PEG below 1.0 is traditionally considered a sign of undervaluation — the market may not be fully pricing in the growth potential. 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.