Is NextEra Energy Partners LP overvalued or undervalued?

As of 25 January 2024, the valuation grade for NextEra Energy Partners LP has moved from very attractive to risky, indicating a significant shift in its perceived investment quality. The company is currently considered overvalued based on its financial metrics. The P/E ratio stands at 15, while the industry average is approximately 14.29, suggesting that NextEra is priced higher than its peers. Additionally, the EV to EBITDA ratio is 7.59, which is comparable to Brookfield Infrastructure Partners LP at 8.07, yet the PEG ratio of 0.10 highlights a concerning growth expectation relative to its price.
In comparison to its peers, NextEra Energy Partners LP's return on capital employed (ROCE) is a mere 1.57%, while Brookfield Infrastructure Partners LP, which is rated very attractive, presents a more favorable valuation profile. The stock has underperformed significantly, with a year-to-date decline of 54.61% compared to a modest 2.44% gain in the S&P 500. Given these factors, NextEra Energy Partners LP appears to be overvalued in the current market landscape.