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 appears to be overvalued, particularly given its P/E ratio of 15, which is higher than the peer average of 12.40 for Brookfield Infrastructure Partners LP, a very attractive competitor, and its EV to EBITDA ratio of 7.59, which is also higher than the peer average of 7.92. The PEG ratio of 0.10 suggests that the stock may not be priced appropriately relative to its growth expectations.
In comparison to its peers, NextEra Energy Partners LP's valuation metrics indicate that it is not performing well, especially when contrasted with Brookfield Renewable Corp., which has a risky rating but a more favorable EV to EBITDA of 7.79. The company's stock has significantly underperformed against the S&P 500, with a year-to-date return of -43.37% compared to the index's 12.22%, and a staggering -60.99% return over the past year against the S&P 500's 17.14%. This performance further reinforces the notion that the stock is overvalued in the current market landscape.