Clearway Energy, Inc. (CWEN): what the price requires

At today's price, Clearway Energy, Inc. (CWEN) is priced for +16.6% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-19 · Source: https://boothcheck.com/report/CWEN

Headline

FieldValue
TickerCWEN
CompanyClearway Energy, Inc.
Current price$33.44/sh
CompositionFlexible Generation 20% / Renewables & Storage 80%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin today14.7%
Implied growth16.6%
Multiple paid76x operating income

Solve inputs: computed at a 5.6% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~17.5pp.

Reconcile: at the x-ray's 9.3% required return this reads ~13 years; the models below use their own rates.

How unusual the bet is: within-range

ReferenceValue
vs own history-0.27σ
cohort percentile (of 72 peers)100
sustained it ~5 years at this level46%
implied end-window share0%

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset—0—
Earnings—0—
Relative1.85x3expensive
Growth1.06x4expensive

Families that justify the price: Growth Families that call it expensive: Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 4.3%); the inversion above states its own rate.

Per-Model Detail (n=7)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth——no—
DCF Exit MultipleGrowth$62.740.53xyesExit EV/EBITDA: 16.7x / 18.7x / 20.7x (bear / base = today's held flat / bull), 6yr
Relative ValuationRelative$18.091.85xyesP/S fallback (negative EPS): Sector P/S 2.5x × TTM revenue — excluded from consensus
Simple DDMGrowth$20.291.65xyesDPS $1.85, g=0.1% (sustainable: ROE (TTM) × retention; not the terminal-growth assumption), ke=9.3%
Two-Stage DDMGrowth$35.560.94xyesStage 1: 5% for 5yr, Stage 2: 3.5% perpetual
Simple Excess ReturnAsset$0.11304.00xyesBV/sh $8.59, ROE (TTM) 0.1%, ke 9.3% (excluded from median)
Two-Stage Excess ReturnAsset$0.05668.80xyes5yr excess ROE then converge to ke=9.3% (excluded from median)
Discounted Future Market CapGrowth$28.501.17xyesRev $1.5B, growth 9% (input: historical growth; tapered), Terminal P/S: 3.9x / 4.6x / 5.4x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$0.00—noNegative/zero EPS — earnings-based value floored at $0
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$0.013344.00xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.45B × (1−21%) / WACC 4.3% → EPV (no growth) (excluded from median)
Residual IncomeAsset$0.04836.00xyesBV $8.59 + 5yr PV of (ROE (TTM) 0.1% − Kₑ 9.3%) × BV; BV grows 0.1%/yr (excluded from median)
Graham NumberAsset——no—
EV/EBITDA RelativeRelative$8.953.74xyesEBITDA $0.88B × sector EV/EBITDA 13.0x
FCF YieldEarnings$0.013344.00xyesFCF $656.0M / Kₑ 9.3% — zero-growth perpetuity (excluded from median)
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings——no—
ROIC-Justified P/BAsset$0.28119.43xyesBV $8.59 × (ROIC 0.1% / WACC 4.3%) (excluded from median)
P/Sales SectorRelative$18.091.85xyesRevenue $1.49B × sector P/S 2.5x
PEG Fair ValueRelative——no—
Earnings YieldEarnings——no—
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$9.2b
Net debt / NOPAT (after-tax)53.79x
Net debt / operating income (pre-tax)42.50x
Interest coverage0.5x
Burning cashno

Bullet Takeaways

Bull Case

Valuing a company like Clearway calls for a different lens than a normal industrial, and that is where the bull case starts. This is a yieldco: it owns operating wind, solar, battery, and flexible gas plants, most of them under long-term contracts, and its job is to convert the contracted cash those plants produce into a growing dividend. Reported earnings are the wrong gauge because the depreciation on a large fleet of capital-intensive assets swamps the net-income line. The figure that matters is cash available for distribution, and the company reaffirmed full-year 2026 CAFD guidance of $470 million to $510 million, supporting a quarterly dividend of about $0.4676 a share, an annualized yield above 5%. For an income-oriented holder, the question is the durability and growth of that distribution, and Clearway has a visible path to grow it.

The contracts are the moat. Clearway's revenue comes largely from long-dated power-purchase agreements with utilities and corporate buyers, which fixes the price of the electricity for years and insulates the cash flows from spot-market swings. The company keeps lengthening and upgrading that book: in the most recent period it completed the $324 million Cardinal solar acquisition, reached substantial completion on the 320 megawatt Honeycomb battery portfolio, and restructured a contract alongside a new 15-year agreement with an investment-grade hyperscaler. A 15-year contract with a creditworthy data-center buyer is exactly the kind of long, indexed cash flow a yieldco is built to own, and it lands as electricity demand from data centers is rising.

The growth pipeline is funded and accelerating. Management now expects to deploy 20% more corporate cash between 2026 and 2029 than its prior plan, and is guiding toward the top end of a 2030 CAFD-per-share target range of $2.90 to $3.10, with a 2027 target of $2.70 per share or better. The supply of drop-down projects from its developer affiliate gives it a pipeline of assets to acquire at known economics. A vehicle with contracted cash flows, a rising dividend, and a funded acquisition runway into a power-hungry decade is the substance behind the price.

Bear Case

The bear case is that the moat, long contracts on clean-power assets, is being slowly chipped by the cost of capital it takes to grow them, and the data shows the strain on the equity. Clearway grows by buying more plants, and it funds those purchases with a mix of debt and equity. Gross debt stands near $9.5 billion against trailing operating profit of only about $180 million, and the share count has been climbing fast as the company issues equity to fund the pipeline. That combination, heavy debt plus steady share issuance, is the yieldco's structural vulnerability: each new project has to earn more than the blended cost of the debt and the freshly issued shares used to buy it, or the per-share cash flow that backs the dividend stops growing. When rates are high, that spread narrows, and the growth engine that justifies the premium runs slower.

The leverage is not a side issue, it is the spine of the risk, and Clearway is explicit about it. The company warns that its financing covenants could "prevent the Company from paying cash dividends, and the Company's failure to comply with those and other covenants could result in an event of default which, if not cured or waived, may entitle the related lenders to demand repay"ment. Most of that debt is non-recourse at the project level, which protects the parent, but it also means the cash from a given plant first serves that plant's lenders before it can flow up to the dividend. The 10-K describes managing "the variability of expected future cash interest payments that may arise in connection with its non-recourse facility level debt or any potential refinancing of its Senior Notes." Refinancing maturing project debt at higher rates is a direct claim on the CAFD that pays the distribution.

The price already assumes the growth holds. Inverted, today's level pays roughly 80 times company-wide operating profit, a figure that only makes sense for a vehicle expected to keep compounding its distribution. Only the dividend-discount and growth-cash-flow methods reach the price; the asset-value and earnings-power lenses break down on a business whose GAAP returns are near zero. History is a caution: only about a quarter of comparable fast-growers sustained this pace for the roughly eight years the price requires. The first quarter underlined the sensitivity, with a $68 million net loss and CAFD of $70 million against $257 million of adjusted EBITDA. The dividend is covered today, but it is covered by a machine that has to keep acquiring, refinancing, and issuing to stay ahead, and any of those getting more expensive narrows the cushion.

Valuation

This report sets no fair value and no target. It starts from the $37.47 price (June 27, 2026) and asks what that price assumes, then measures how far it sits from each way of valuing the business, using the lens a yieldco actually requires.

The conventional methods do not apply cleanly here, and that itself is the first read. Clearway's GAAP return on equity is near zero because depreciation on a large contracted asset base consumes the earnings line, so the asset-value and earnings-power methods produce figures that are not meaningful for this kind of company. The methods that do apply are the dividend-discount models and the growth-cash-flow models, which value the distribution and its growth directly. Those are the lenses that reach the price, and they reach it by assuming the dividend keeps growing toward management's 2030 target. The right question is not whether the assets are cheap on book value; it is whether the contracted cash will fund a rising distribution.

Inverting the price quantifies the bet. At today's level the market is paying roughly 80 times company-wide operating profit, which implies growth held near the self-funding ceiling for about eight years. The pace is within what Clearway has recently delivered through acquisitions; the stretch is the duration. Only about a quarter of comparable fast-growers sustained that for the roughly eight years required. For a yieldco, sustaining it means continuing to buy accretive projects and refinance project debt without the cost of capital eroding the per-share cash flow, which is precisely the thing high rates threaten.

Solvency is the dominant fact and must be read on yieldco terms. About $9.2 billion of net debt sits against the contracted cash flows, most of it non-recourse at the project level, so it is serviced by the specific plants before cash flows up to the dividend. Standard interest-coverage and years-to-repay math against consolidated GAAP operating profit overstates the fragility, because the debt is matched to long-dated contracted revenue. But the covenant language is real, and the company states plainly that a breach could halt the dividend. The price is paying for a growing distribution; the balance sheet is the constraint on how fast and how safely that distribution can grow.

Catalysts

The clearest catalyst is the dividend-growth trajectory and the CAFD that funds it. Clearway reaffirmed 2026 cash-available-for-distribution guidance of $470 million to $510 million, set a 2027 target of $2.70 per share or better, and said it is increasingly focused on the top end or better of its 2030 CAFD-per-share range of $2.90 to $3.10. Each quarterly dividend declaration and each CAFD update is a direct read on whether that path is holding.

Capital deployment is the growth engine to watch. The company now plans to deploy 20% more corporate cash between 2026 and 2029 than before, and recently closed the $324 million Cardinal solar acquisition, completed the Honeycomb battery portfolio, and signed a new 15-year power agreement with an investment-grade hyperscaler. New drop-downs and corporate-buyer contracts, especially data-center offtake, are the events that extend and grow the contracted cash flows.

The macro variable with the most leverage is the cost of capital. A yieldco's accretion depends on buying projects at returns above its blended financing cost, and refinancing maturing non-recourse debt at acceptable rates. Moves in interest rates therefore swing the growth case more than any single project, which makes the financing terms on each new deal the detail to track.

Peer Cohorts (Per Segment, With Filing Citations)

Flexible Generation (reported)

Renewables & Storage (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Clearway Energy Q1 2026 results, May 2026 · Clearway Energy Q1 2026 earnings call, May 2026

View the full interactive CWEN report on boothcheck