CWEN

We rate Clearway Energy, Inc. (CWEN) as a Reduce with a composite score of 48.0/100 at a current price of $39.38. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in momentum (72th percentile) and stability (70th percentile), which together account for the majority of the composite score. Offsetting weakness in quality (22th percentile) and value (30th percentile) tempers our overall conviction. We assign a No Moat rating (36/100), High uncertainty, and Poor capital allocation.

Key items to watch: balance sheet deleveraging progress; the path to profitability; valuation compression risk if growth disappoints. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Clearway Energy, Inc. holds a top-quartile position (#0 of 50) within the Transportation, Communications, Electric, Gas, And Sanitary Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 48.0/100 places it at rank #2331 in our full 7,333-stock universe. At $5.4B in market capitalization, Clearway Energy, Inc. is a mid-cap player in the Transportation, Communications, Electric, Gas, And Sanitary Services space, which limits certain scale advantages but may allow for more agile strategic execution.

The near-term outlook is constructive, with revenue growing at 17% and momentum in the 72th percentile confirming positive market sentiment and institutional accumulation. The combination of strong top-line growth and favorable price dynamics suggests the company is executing well on its growth strategy. Investment factor at the 34th percentile indicates reinvestment patterns that investors should monitor for sustainability.

The margin cascade tells an important story: gross margins of 67% (+11.9pp vs sector) narrow to operating margins of 21% (+3.6pp vs sector) and net margins of -3.1%, yielding a gross-to-net conversion rate of -5%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $39.38, Clearway Energy, Inc. is trading at a premium to fundamental value. Our value factor score of 30/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.

The stock currently trades at a P/E of 22.7x (a 34% premium to the sector median of 16.9x), EV/EBITDA of 12.6x (at a premium), P/B of 0.8x, P/S of 3.0x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis finds only partially justified by current fundamentals.

We assign a High uncertainty rating to Clearway Energy, Inc.. Key risk factors include significant leverage (180% debt-to-equity), current negative profitability (net margin -3.1%), weak quality scores (22th percentile). The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: significant leverage (180% debt-to-equity); current negative profitability (net margin -3.1%); weak quality scores (22th percentile); low beta of 0.56 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 70th percentile and quality factor at the 22th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 67% provide a buffer against cost pressures; above-average stability (70th percentile) suggests predictable business dynamics; a 6.46% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate Clearway Energy, Inc.'s capital allocation as Poor. Key concerns include low returns on equity (-0.1%), elevated leverage (180% D/E), negative profitability, weak asset returns (ROA -0.0%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — Clearway Energy, Inc. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, Clearway Energy, Inc. receives a Reduce rating with a composite score of 48.0/100 (rank #2331 of 7,333). Our quantitative framework assigns a No Moat (36/100, trend: stable), High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 46/100.

Our analysis does not support a constructive view on Clearway Energy, Inc. at this time. The combination of limited competitive advantages, high uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.