Nextera Energy Partners (NYSE:NEP) versus Southern (NYSE:SO) Financial Analysis

Nextera Energy Partners (NYSE:NEP) and Southern (NYSE:SO) are both oils/energy companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, risk, earnings, dividends, institutional ownership, valuation and profitability.

Volatility & Risk

Nextera Energy Partners has a beta of 0.91, meaning that its share price is 9% less volatile than the S&P 500. Comparatively, Southern has a beta of 0.17, meaning that its share price is 83% less volatile than the S&P 500.



Profitability

This table compares Nextera Energy Partners and Southern’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Nextera Energy Partners -2.88% -0.44% -0.22%
Southern 20.18% 10.04% 2.61%

Dividends

Nextera Energy Partners pays an annual dividend of $2.01 per share and has a dividend yield of 3.9%. Southern pays an annual dividend of $2.48 per share and has a dividend yield of 4.1%. Nextera Energy Partners pays out 69.1% of its earnings in the form of a dividend. Southern pays out 80.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Nextera Energy Partners has raised its dividend for 3 consecutive years and Southern has raised its dividend for 17 consecutive years. Southern is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent recommendations for Nextera Energy Partners and Southern, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nextera Energy Partners 0 2 3 0 2.60
Southern 2 8 1 0 1.91

Nextera Energy Partners presently has a consensus target price of $50.00, suggesting a potential downside of 1.96%. Southern has a consensus target price of $55.11, suggesting a potential downside of 8.35%. Given Nextera Energy Partners’ stronger consensus rating and higher possible upside, equities analysts clearly believe Nextera Energy Partners is more favorable than Southern.

Insider and Institutional Ownership

80.5% of Nextera Energy Partners shares are owned by institutional investors. Comparatively, 58.4% of Southern shares are owned by institutional investors. 0.6% of Nextera Energy Partners shares are owned by company insiders. Comparatively, 0.9% of Southern shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Nextera Energy Partners and Southern’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Nextera Energy Partners $771.00 million 3.71 $192.00 million $2.91 17.53
Southern $23.50 billion 2.66 $2.24 billion $3.07 19.59

Southern has higher revenue and earnings than Nextera Energy Partners. Nextera Energy Partners is trading at a lower price-to-earnings ratio than Southern, indicating that it is currently the more affordable of the two stocks.

Summary

Southern beats Nextera Energy Partners on 10 of the 17 factors compared between the two stocks.

About Nextera Energy Partners

NextEra Energy Partners, LP acquires, owns, and manages contracted clean energy projects in the United States. It owns a portfolio of contracted renewable generation assets consisting of wind and solar projects with approximately 4,859 megawatts of capacity, as well as seven contracted natural gas pipeline assets. The company was founded in 2014 and is headquartered in Juno Beach, Florida.

About Southern

The Southern Company, through its subsidiaries, engages in the generation, transmission, and distribution of electricity. It operates in four segments: Gas Distribution Operations, Gas Pipeline Investments, Wholesale Gas Services, and Gas Marketing Services. The company also constructs, acquires, owns, and manages power generation assets, including renewable energy facilities and sells electricity in the wholesale market; and distributes natural gas in Illinois, Georgia, Virginia, and Tennessee, as well as provides gas marketing services, wholesale gas services, and gas pipeline investments operations. It owns and/or operates 33 hydroelectric generating stations, 26 fossil fuel generating stations, 3 nuclear generating stations, 13 combined cycle/cogeneration stations, 40 solar facilities, 9 wind facilities, and 1 biomass facility; and constructs, operates, and maintains 75,200 miles of natural gas pipelines and 14 storage facilities with total capacity of 158 Bcf to provide natural gas to residential, commercial, and industrial customers. The company serves approximately 9 million electric and gas utility customers. It also provides products and services in the areas of distributed generation infrastructure, energy efficiency, and utility infrastructure. In addition, the company offers digital wireless communications services with various communication options, including push to talk, cellular service, text messaging, wireless Internet access, and wireless data. The Southern Company was founded in 1945 and is headquartered in Atlanta, Georgia.

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