Clearway Energy (CWEN.A): Assessing Valuation as Clean Energy Pipeline Drives Investor Optimism and Tax Credit Tailwinds

Clearway Energy (NYSE:CWEN.A) is seeing a lift in investor confidence as its strong pipeline of renewable and battery storage projects is set to take advantage of tax credits available through 2029. This keeps the company aligned with clean energy trends.

See our latest analysis for Clearway Energy.

Clearway Energy’s share price has gained strong momentum in 2024, delivering a 21.02% year-to-date share price return and an impressive 20.53% total shareholder return over the past year, as enthusiasm builds around its growth pipeline and clean energy positioning.

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With shares trading well below analyst price targets and a robust growth outlook, investors are left debating whether Clearway Energy is still undervalued, or if the market is already pricing in the company’s future potential.

Most Popular Narrative: 17% Undervalued

Clearway Energy's most popular valuation narrative calculates a fair value of $36.11, which is notably above the recent closing price of $29.99. This approach suggests that the market might not fully appreciate the company's projected growth or future profit potential compared to its current trading level.

The company's diversified asset base across wind, solar, and storage in multiple core U.S. markets, along with continued investment in grid-relevant battery projects, reduces exposure to regional volatility and supports steady net margin expansion as grid modernization deepens.

Read the complete narrative.

Curious how analysts justify this higher price target? The narrative calls for a leap in profit margins, ambitious topline expansion, and premium multiples that are rarely seen in the sector. Want to see which bold financial assumptions power this calculation? Don’t miss the full story behind Clearway's forecasted trajectory.

Result: Fair Value of $36.11 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rising interest rates or changes to clean energy policies could pose challenges to Clearway's growth path and impact future profitability.

Find out about the key risks to this Clearway Energy narrative.

Another View: Testing the Valuation with Market Ratios

While the narrative points to Clearway Energy being undervalued, its current price-to-earnings ratio is 46.5 times. This is high compared to the industry average of 17.5 and its own fair ratio of 30.4. This sizable gap suggests upside could be limited if market sentiment shifts. Could this premium multiple signal more risk than reward?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Clearway Energy Narrative

If the current narrative doesn’t match your perspective, why not dive into the numbers and construct your own Clearway Energy story in just a few minutes? Do it your way

A great starting point for your Clearway Energy research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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