Clearway Energy (CWEN.A): Fresh Dividend and Strong Earnings Spark a Closer Look at Valuation

Clearway Energy (CWEN.A) just reported third quarter earnings, showing a huge jump in net income compared to last year. The company also announced a new quarterly dividend. This adds another reason for investors to keep an eye on the stock.

See our latest analysis for Clearway Energy.

Following Clearway Energy’s stellar net income jump and fresh dividend news, investor optimism has clearly translated into a surge in momentum. The stock’s 1-month share price return sits at an impressive 14.5%, and long-term shareholders have been rewarded too, with a 40.4% total return over the past year, signaling strong recovery and renewed confidence in the business.

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After such a strong rally and with earnings surprising on the upside, investors now face a key question: is Clearway Energy still trading below its true value, or has the recent momentum already priced in future growth?

Most Popular Narrative: 6.8% Undervalued

Clearway Energy’s last close at $34.19 sits below the narrative fair value of $36.70, indicating room for further upside if targets are hit. The current setup invites a closer look at the drivers behind this optimistic outlook.

The company's diversified asset base across wind, solar, and storage in multiple core U.S. markets, 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 what the narrative projects for revenue growth and profit margins? There is a bold assumption here about long-term cash flows, driven by future contracts and expansion moves. The story behind that valuation will surprise you.

Result: Fair Value of $36.70 (UNDERVALUED)

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

However, tighter credit markets or unfavorable changes to power contract pricing could quickly challenge the bullish case for Clearway Energy’s long-term growth.

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

Another View: What Does the SWS DCF Model Say?

For a different perspective, our DCF model calculates Clearway Energy’s fair value at just $14.38 per share. This is well below the current price, which suggests the market might be overly optimistic about future cash flows or growth. Which valuation feels closer to reality?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Clearway Energy for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 899 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Clearway Energy Narrative

If you have your own ideas or want to test a different viewpoint, you can dig into the numbers and build a custom story for Clearway Energy in just a few minutes, so why not Do it your way?

A great starting point for your Clearway Energy research is our analysis highlighting 3 key rewards and 4 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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