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Clearway Energy, Inc. (NYSE:CWEN.A) Just Reported First-Quarter Earnings: Have Analysts Changed Their Mind On The Stock?

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Simply Wall St
·4 min read
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It's been a good week for Clearway Energy, Inc. (NYSE:CWEN.A) shareholders, because the company has just released its latest quarterly results, and the shares gained 6.3% to US$19.39. It was a pretty bad result overall; while revenues were in line with expectations at US$258m, statutory losses exploded to US$0.26 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Clearway Energy

NYSE:CWEN.A Past and Future Earnings May 10th 2020
NYSE:CWEN.A Past and Future Earnings May 10th 2020

Taking into account the latest results, the most recent consensus for Clearway Energy from five analysts is for revenues of US$1.27b in 2020 which, if met, would be a solid 18% increase on its sales over the past 12 months. Earnings are expected to improve, with Clearway Energy forecast to report a statutory profit of US$0.80 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.23b and earnings per share (EPS) of US$0.90 in 2020. So it's pretty clear the analysts have mixed opinions on Clearway Energy after the latest results; even though they upped their revenue numbers, it came at the cost of a real cut to per-share earnings expectations.

The consensus price target was unchanged at US$21.43, suggesting the business is performing roughly in line with expectations, despite some adjustments to profit and revenue forecasts. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Clearway Energy, with the most bullish analyst valuing it at US$26.00 and the most bearish at US$17.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Clearway Energy's past performance and to peers in the same industry. It's clear from the latest estimates that Clearway Energy's rate of growth is expected to accelerate meaningfully, with the forecast 18% revenue growth noticeably faster than its historical growth of 2.7%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 4.2% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Clearway Energy is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Clearway Energy going out to 2023, and you can see them free on our platform here..

And what about risks? Every company has them, and we've spotted 3 warning signs for Clearway Energy (of which 2 are a bit unpleasant!) you should know about.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.