Reviewing Pinnacle West Capital (NYSE:PNW) & Nextera Energy Partners (NYSE:NEP)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Nextera Energy Partners	-0.73%	1.34%	0.85%
Pinnacle West Capital	12.26%	9.60%	2.43%

Institutional & Insider Ownership

66.0% of Nextera Energy Partners shares are owned by institutional investors. Comparatively, 91.5% of Pinnacle West Capital shares are owned by institutional investors. 0.1% of Nextera Energy Partners shares are owned by insiders. Comparatively, 0.2% of Pinnacle West Capital shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Volatility & Risk

Nextera Energy Partners has a beta of 1.03, suggesting that its stock price is 3% more volatile than the S&P 500. Comparatively, Pinnacle West Capital has a beta of 0.43, suggesting that its stock price is 57% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations for Nextera Energy Partners and Pinnacle West Capital, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Nextera Energy Partners	2	0	0	0	1.00
Pinnacle West Capital	0	7	3	0	2.30

Nextera Energy Partners presently has a consensus target price of $10.00, suggesting a potential upside of 0.00%. Pinnacle West Capital has a consensus target price of $97.00, suggesting a potential upside of 9.15%. Given Pinnacle West Capital’s stronger consensus rating and higher probable upside, analysts plainly believe Pinnacle West Capital is more favorable than Nextera Energy Partners.

Earnings and Valuation

This table compares Nextera Energy Partners and Pinnacle West Capital”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Nextera Energy Partners	$1.23 billion	0.00	-$10.00 million	($0.10)	N/A
Pinnacle West Capital	$5.21 billion	2.04	$501.56 million	$5.03	17.67

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

Dividends

Nextera Energy Partners pays an annual dividend of $3.67 per share. Pinnacle West Capital pays an annual dividend of $3.58 per share and has a dividend yield of 4.0%. Nextera Energy Partners pays out -3,670.0% of its earnings in the form of a dividend. Pinnacle West Capital pays out 71.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Nextera Energy Partners has raised its dividend for 10 consecutive years.

Summary

Pinnacle West Capital beats Nextera Energy Partners on 13 of the 16 factors compared between the two stocks.

About Nextera Energy Partners

NextEra Energy Partners LP engages in the acquisition, management, and ownership of contracted clean energy projects with long-term cash flows. It owns interests in wind and solar projects in North America and natural gas infrastructure assets in Texas. The company was founded on March 6, 2014 and is headquartered in Juno Beach, FL.

About Pinnacle West Capital

Pinnacle West Capital Corporation, through its subsidiary, provides retail and wholesale electric services primarily in the state of Arizona. The company engages in the generation, transmission, and distribution of electricity using coal, nuclear, gas, oil, and solar generating facilities. Its transmission facilities include overhead lines and underground lines; and distribution facilities consist of overhead lines and underground primary cables. The company also owns and maintains transmission and distribution substations; and owns energy storage facilities. Pinnacle West Capital Corporation was incorporated in 1985 and is headquartered in Phoenix, Arizona.