Critical Contrast: 8point3 Energy Partners (CAFD) and NextEra Energy (NYSE:NEE)

8point3 Energy Partners (NASDAQ: CAFD) and NextEra Energy (NYSE:NEE) are both oils/energy companies, but which is the better business? We will compare the two companies based on the strength of their profitability, earnings, valuation, institutional ownership, dividends, analyst recommendations and risk.

Profitability

This table compares 8point3 Energy Partners and NextEra Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
8point3 Energy Partners	23.87%	1.94%	1.11%
NextEra Energy	24.26%	11.88%	3.40%

Insider and Institutional Ownership

55.3% of 8point3 Energy Partners shares are owned by institutional investors. Comparatively, 76.7% of NextEra Energy shares are owned by institutional investors. 0.5% of NextEra Energy shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings and target prices for 8point3 Energy Partners and NextEra Energy, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
8point3 Energy Partners	2	9	3	0	2.07
NextEra Energy	0	1	8	0	2.89

8point3 Energy Partners presently has a consensus target price of $15.54, indicating a potential upside of 10.22%. NextEra Energy has a consensus target price of $151.11, indicating a potential upside of 2.67%. Given 8point3 Energy Partners’ higher possible upside, equities research analysts plainly believe 8point3 Energy Partners is more favorable than NextEra Energy.

Dividends

8point3 Energy Partners pays an annual dividend of $1.06 per share and has a dividend yield of 7.5%. NextEra Energy pays an annual dividend of $3.93 per share and has a dividend yield of 2.7%. NextEra Energy pays out 45.0% of its earnings in the form of a dividend. 8point3 Energy Partners has increased its dividend for 7 consecutive years. 8point3 Energy Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares 8point3 Energy Partners and NextEra Energy’s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
8point3 Energy Partners	$67.15 million	5.90	$51.64 million	N/A	N/A
NextEra Energy	$16.88 billion	4.09	$8.30 billion	$8.73	16.86

NextEra Energy has higher revenue and earnings than 8point3 Energy Partners.

Risk & Volatility

8point3 Energy Partners has a beta of 0.83, indicating that its stock price is 17% less volatile than the S&P 500. Comparatively, NextEra Energy has a beta of 0.32, indicating that its stock price is 68% less volatile than the S&P 500.

Summary

NextEra Energy beats 8point3 Energy Partners on 9 of the 16 factors compared between the two stocks.

About 8point3 Energy Partners

8point3 Energy Partners LP owns, operates and acquires solar energy generation projects. As of November 30, 2016, Company’s portfolio comprised interests in 642 Megawatt (MW) of solar energy projects. The Company is developing projects under utility, commercial and industrial (C&I) and residential categories. As of November 30, 2016, the Company owned interests in nine utility-scale solar energy projects; four C&I solar energy projects, and a portfolio of residential Distributed generation (DG) Solar assets. The Company’s utility project portfolio comprises projects, which include Maryland Solar, Solar Gen 2, Lost Hills Blackwell, North Star, RPU, Quinto, Hooper and Kingbird. The Company’s C&I projects comprise UC Davis, Macy’s California, Macy’s Maryland and Kern. The Company’s residential portfolio targets homeowners in the United States.

About NextEra Energy

NextEra Energy, Inc. (NEE) is a holding company. The Company is an electric power companies in North America and, through its subsidiary NextEra Energy Resources, LLC (NEER) and its affiliated entities, is the generator of renewable energy from the wind and sun. NEE also owns and/or operates generation, transmission and distribution facilities to support its services to retail and wholesale customers, and has investments in gas infrastructure assets. Its segments include FPL and NEER. Florida Power & Light Company (FPL) is a rate-regulated electric utility engaged primarily in the generation, transmission, distribution and sale of electric energy in Florida. NEER is a diversified clean energy company with a business strategy that emphasizes the development, acquisition and operation of long-term contracted assets with a focus on renewable projects. NEER owns, develops, constructs, manages and operates electric generation facilities in wholesale energy markets.