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NextEra Energy Partners (NEP) to Gain From Organic Assets, Buyouts

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NextEra Energy Partners (NEP - Free Report) is benefiting from organic growth and selective acquisitions. The firm is also gaining from its well spread pipeline assets in Texas.

This Zacks Rank #2 (Buy) stock delivered an earnings surprise of 1.69%, on average, in the last four quarters. The Zacks Consensus Estimate for 2021 earnings per unit is pegged at $4.52, up 0.9% over the past 60 days.  


The partnership aims to expand existing operations through organic growth and selective acquisitions. The acquired assets provide long-term investment opportunities for the firm. The agreement with Brookfield Renewable to acquire four operating wind assets for $733 million will expand its renewable operation and have a positive impact on cash flow.

The firm is actively exploring opportunities to expand operations through benefits of government incentives, declining installation costs and improving technology. The renewable assets owned by NextEra Energy Partners are predominantly wind assets. The firm currently has 4,855 MW of wind assets and 975 MW of solar assets in the renewable portfolio.

The firm will benefit from its eight natural gas pipelines, all strategically located, serving power producers and municipalities in South Texas, commercial and industrial customers in the Houston area, processing plants, along with producers in the Eagle Ford Shale.

The partnership has sold its Canadian portfolio of wind and solar assets and is focused on expanding operations in the United States. This strategic move will allow the firm to enjoy the domestic benefit of lower effective corporate tax rate and longer tax shield. The decision to move out from Canada and use the proceeds in U.S. operations is expected to be accretive to long-term growth.


NextEra Energy Partners ability to generate clean energy from solar and wind sources can at times fall from desired levels due to unfavorable weather and affect operations.

The firm depends on a limited group of customers for revenues, and if NextEra Energy Partners fails to renew old and expired contracts on favorable terms, its operations might be adversely impacted.

Price Performance

In the past 12 months, units of NextEra Energy Partners have gained 42% compared with the industry’s 39.3% rally.

Zacks Investment ResearchImage Source: Zacks Investment Research


Other Stocks to Consider

Some other top-ranked stocks in the same industry are Ameresco Inc. (AMRC - Free Report) , Covanta Holding Corporation and Texas Pacific Land Corporation (TPL - Free Report) , each currently having a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for 2021 earnings per share for Ameresco, Covanta and Texas Pacific has moved up 6.6%, 133.3% and 3.4%, respectively, in the past 60 days.

The current dividend yield of Covanta and Texas Pacific is 1.8% and 0.69% respectively. At present, Ameresco’s ROE for 12 months is 12.44%, higher than the industry average of 4.96%.

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