Value
7.1/10data confidence 83%| Component | Sub-score |
|---|---|
| P/S | 6.7 |
| EV/EBITDA | 2.4 |
| Fwd P/E | 9.0 |
| PEG | 10.0 |
| Analyst target | 7.5 |
- ▸Forward P/E: 12.0x
- ▸PEG: 0.00
- ▸Attractively valued
CWEN · Why this verdict
Why Clearway Energy (CWEN) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.4/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The business converts net income to free cash flow at a rate of approximately 10 times — far exceeding what GAAP earnings alone imply — indicating that cash generation is a structural feature of the long-lived renewable-energy asset base. Quality breakdown | Free cash flow remains positive over the next four consecutive quarters, confirming the cash-generation quality is durable and not a one-period anomaly. | →Stable |
| CounterA free-cash-flow-to-net-income ratio this high typically signals that net income is minimal or near zero; the company may be heavily depreciation-burdened rather than genuinely cash-generative in a way that supports expanding capital returns. | ||
Three misses in the last four reported quarters — with an average EPS surprise of negative 33.5% — signal that earnings are highly variable and difficult to forecast, creating a meaningful obstacle to building conviction in the near-term thesis. Earnings | If earnings delivery improves, the company should beat or meet consensus EPS in 3 of the next 4 quarters, resetting the track record on a more constructive footing. | →Stable |
| CounterRenewable-energy businesses often report lumpy earnings due to weather variability and seasonal generation profiles — the misses may reflect measurement timing rather than a deterioration in the underlying business. | ||
Despite an elevated headline yield, the dividend is flagged as potentially unsafe, creating a yield-trap risk: investors holding for income may face a cut that simultaneously impairs both the income stream and the share price. Catalyst breakdown | The dividend is maintained without a cut for four consecutive quarters while the company reports positive actual EPS in at least two of those quarters, falsifying the safety concern. | →Stable |
| CounterRenewable-energy assets operating under long-term power-purchase agreements can support distributions through contracted cash flows even when GAAP earnings are volatile — the dividend may be more durable than the earnings line suggests. | ||
With approximately 98% of assets concentrated in renewable energy and storage, and a single counterparty representing a significant portion of contracted revenue, the business is materially exposed to commodity pricing and counterparty execution risk. Bear case | If the concentration risk is manageable, the company should demonstrate revenue stability over four consecutive quarters without a material counterparty-driven shortfall. | →Stable |
| CounterLong-term power-purchase agreements typical of renewable-energy portfolios can provide contracted cash-flow visibility that partially offsets the headline concentration risk. | ||
The business converts net income to free cash flow at a rate of approximately 10 times — far exceeding what GAAP earnings alone imply — indicating that cash generation is a structural feature of the long-lived renewable-energy asset base.
→StableQuality breakdown
- Expectation
- Free cash flow remains positive over the next four consecutive quarters, confirming the cash-generation quality is durable and not a one-period anomaly.
CounterA free-cash-flow-to-net-income ratio this high typically signals that net income is minimal or near zero; the company may be heavily depreciation-burdened rather than genuinely cash-generative in a way that supports expanding capital returns.
Three misses in the last four reported quarters — with an average EPS surprise of negative 33.5% — signal that earnings are highly variable and difficult to forecast, creating a meaningful obstacle to building conviction in the near-term thesis.
→StableEarnings
- Expectation
- If earnings delivery improves, the company should beat or meet consensus EPS in 3 of the next 4 quarters, resetting the track record on a more constructive footing.
CounterRenewable-energy businesses often report lumpy earnings due to weather variability and seasonal generation profiles — the misses may reflect measurement timing rather than a deterioration in the underlying business.
Despite an elevated headline yield, the dividend is flagged as potentially unsafe, creating a yield-trap risk: investors holding for income may face a cut that simultaneously impairs both the income stream and the share price.
→StableCatalyst breakdown
- Expectation
- The dividend is maintained without a cut for four consecutive quarters while the company reports positive actual EPS in at least two of those quarters, falsifying the safety concern.
CounterRenewable-energy assets operating under long-term power-purchase agreements can support distributions through contracted cash flows even when GAAP earnings are volatile — the dividend may be more durable than the earnings line suggests.
With approximately 98% of assets concentrated in renewable energy and storage, and a single counterparty representing a significant portion of contracted revenue, the business is materially exposed to commodity pricing and counterparty execution risk.
→StableBear case
- Expectation
- If the concentration risk is manageable, the company should demonstrate revenue stability over four consecutive quarters without a material counterparty-driven shortfall.
CounterLong-term power-purchase agreements typical of renewable-energy portfolios can provide contracted cash-flow visibility that partially offsets the headline concentration risk.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Clearway Energy converts revenue to free cash flow at a rate roughly 10 times its reported net income, but three earnings misses in the last four quarters with an average negative surprise of 33.5%, a dividend flagged as potentially unsafe, and concentrated commodity and counterparty exposure keep the risk profile elevated despite a modest headline valuation.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 0.6 |
| Gross margin | 8.7 |
| Op margin | 3.1 |
| Net margin | 0.3 |
| Current ratio | 4.3 |
| FCF quality | 10.0 |
| Moat | 5.8 |
| Piotroski F | 7.8 |
- ▸Excellent cash conversion: 1000% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
7.2/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 7.2 |
Momentum
1.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.0 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 2.2 |
| Volume | 2.6 |
- ▸Capitulation risk (RSI 23, below 200MA)
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA but MA still rising (+4.3%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
7.6/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 8.3 |
| Price target | 8.8 |
| erm sentiment | 5.0 |
- ▸Analyst upside: 34%
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
3.3/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 0.9 |
| quality rank | 2.6 |
| growth rank | 4.5 |
Technical
7.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 10.0 |
| support resistance | 9.8 |
| 52w position | 5.7 |
| gap | 5.0 |
Risk (lower is worse)
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.8 |
| days to cover | 4.6 |
| volatility | 2.5 |
| put call | 8.0 |
| implied vol | 3.3 |
| beta | 7.7 |
| debt equity | 3.4 |
- ▸High IV: 60%
- ▸Concentration risks: 2 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
3.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| dividend safety | 4.8 |
- ▸Earnings concerns: 1B/3M
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- ASYMMETRY:2.0>=1.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:32d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- MOMENTUM:1.8<4.5
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
2.05
Upside
+16.4%
Downside
8.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 4.4 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Sentiment at 7.6) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:1.8<4.5) reinforce the read. Current asymmetry R:R is 2.05 — supplementary context, not the trigger for this path.
The strongest dimensions are Sentiment at 7.6, Technical at 7.6, and Growth at 7.2; the weakest are Momentum at 1.8, Catalyst at 3.0, and Peer rank at 3.3. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 2.05 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Exceptional Free Cash Flow Conversion
Trip ifFree cash flow falls below $0 for 2 consecutive quarters.
- P2Erratic Earnings Delivery Three Misses
Trip ifEPS surprise exceeds 5% for 3 consecutive quarters from the current trailing average of -33.5%.
- P3Dividend Yield Trap Safety Concern
Trip ifActual quarterly EPS rises above $0 in at least 3 of the next 4 quarters while the dividend per share remains above $0, confirming dividend coverage without a cut.
- P4Concentrated Commodity Counterparty Risk
Trip ifOperating income rises above $0 for 2 consecutive quarters.