Critical Analysis: JA Solar (JASO) versus Nextera Energy Partners (NEP)

JA Solar (NASDAQ: JASO) and Nextera Energy Partners (NYSE:NEP) are both oils/energy companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, dividends, earnings and risk.

Volatility and Risk

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JA Solar has a beta of 1, suggesting that its stock price has a similar volatility profile to the S&P 500.Comparatively, Nextera Energy Partners has a beta of 1.25, suggesting that its stock price is 25% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for JA Solar and Nextera Energy Partners, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
JA Solar 1 2 0 0 1.67
Nextera Energy Partners 0 4 8 0 2.67

JA Solar currently has a consensus price target of $6.33, indicating a potential downside of 8.35%. Nextera Energy Partners has a consensus price target of $42.36, indicating a potential upside of 6.44%. Given Nextera Energy Partners’ stronger consensus rating and higher probable upside, analysts plainly believe Nextera Energy Partners is more favorable than JA Solar.

Institutional & Insider Ownership

33.0% of JA Solar shares are owned by institutional investors. Comparatively, 83.2% of Nextera Energy Partners shares are owned by institutional investors. 0.5% of Nextera Energy Partners shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

Nextera Energy Partners pays an annual dividend of $1.62 per share and has a dividend yield of 4.1%. JA Solar does not pay a dividend. Nextera Energy Partners pays out -135.0% of its earnings in the form of a dividend. JA Solar has raised its dividend for 2 consecutive years.

Valuation and Earnings

This table compares JA Solar and Nextera Energy Partners’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
JA Solar $2.27 billion 0.14 $102.89 million $1.54 4.49
Nextera Energy Partners $807.00 million 2.68 -$62.00 million ($1.20) -33.17

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

Profitability

This table compares JA Solar and Nextera Energy Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
JA Solar 2.84% 7.73% 2.52%
Nextera Energy Partners -8.63% 1.80% 0.47%

Summary

Nextera Energy Partners beats JA Solar on 9 of the 17 factors compared between the two stocks.

JA Solar Company Profile

JA Solar Holdings Co., Ltd., together with its subsidiaries, designs, develops, manufactures, and sells solar power products based on crystalline silicon technologies. The company's principal products include monocrystalline and multicrystalline solar cells and modules. It also provides monocrystalline and multicrystalline silicon wafers; solar product processing services; and solar power plant project development and electricity generation services. The company sells its products primarily under the JA Solar brand name, as well as produces original equipment for manufacturers or customers under their brand names. JA Solar Holdings Co., Ltd. sells its solar cell and module products to module manufacturers, system integrators, project developers, and distributors worldwide. The company was founded in 2005 and is based in Beijing, the People's Republic of China.

Nextera Energy Partners Company Profile

Nextera Energy Partners, LP is a limited partnership formed to acquire, manage and own contracted clean energy projects. The Company, through its limited partnership interest in NextEra Energy Operating Partners, LP (NEP OpCo), owns a portfolio of contracted renewable generation assets consisting of wind and solar projects, as well as contracted natural gas pipeline assets. The Company’s primary business objective is to invest in contracted clean energy projects. As of December 31, 2016, the Company’s project portfolio of clean, contracted renewable energy assets (initial portfolio) included approximately 989 megawatts (MW) of wind and solar energy generating facilities located in the United States and Canada. As of December 31, 2016, the Company’s portfolio included Genesis, Northern Colorado, Tuscola Bay, Elk City, Perrin Ranch, Bluewater, Moore, Sombra, Shafter, Palo Duro, Stateline, Mammoth Plains, Jericho, Cedar Bluff Wind and Golden Hills Wind.

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