If you’ve been watching Clearway Energy stock, chances are you’ve found yourself wondering whether now is the right moment to buy, hold, or just keep an eye on it. At $27.25 a share, the stock has shown some sparks of life, up 0.4% over the past week and treading water over the past month. It’s easy to get caught up in those periodic headlines about renewable energy or shifting market winds. Most investors care about something more fundamental: is Clearway Energy undervalued or overpriced right now?
Let’s look at the numbers. So far this year, the stock is up 10.0%, adding to a solid 51.4% gain over the past five years. However, there has been real volatility along the way, including a 7.4% drop over the past three years. Recent price moves have been influenced by broader market optimism around clean energy and infrastructure, even as investors weigh longer-term risks and shifting growth expectations. While excitement has been tempered by some cautious sentiment in the sector, there is no question that Clearway’s story is still being written.
When it comes to value, here is where things get a bit more interesting: based on six different valuation checks, Clearway gets a score of 2, meaning it is considered undervalued by two of the metrics analysts typically watch. But are these numbers really telling the whole story? Next, we will break down these valuation approaches to see what they reveal, and why there might be an even more insightful way to judge Clearway’s true investment potential.
Clearway Energy scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
The Discounted Cash Flow (DCF) model estimates the value of a company by projecting its future cash flows and discounting them back to today’s value. For Clearway Energy, this approach involves looking at expected Free Cash Flow (FCF) over the coming years and aggregating those to arrive at an intrinsic value per share.
Currently, Clearway Energy’s last twelve months of Free Cash Flow stand at $511.5 Million. Based on analyst estimates and extended projections, the company’s FCF is expected to fluctuate over the next decade, reaching approximately $385 Million by 2029. The early analyst projections cover up to 2029, and further estimates beyond this rely on extrapolation. These forecasts use the 2 Stage Free Cash Flow to Equity model, factoring in both short-term analyst opinions and longer-term trends estimated by financial modeling platforms.
After discounting these projected cash flows, the DCF valuation arrives at an intrinsic value of $10.62 per share. With Clearway Energy’s current share price at $27.25, the stock trades at a premium, meaning it is about 156.7% overvalued according to this method.
Result: OVERVALUED
Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Clearway Energy.
CWEN.A Discounted Cash Flow as at Sep 2025
Our Discounted Cash Flow (DCF) analysis suggests Clearway Energy may be overvalued by 156.7%. Find undervalued stocks or create your own screener to find better value opportunities.
For profitable companies like Clearway Energy, the price-to-earnings (PE) ratio is a widely used valuation tool. It captures how much investors are willing to pay per dollar of earnings, reflecting both the company’s profitability today and expectations for future growth. Generally, companies with robust growth outlooks and lower risk profiles tend to justify higher PE ratios, while those facing slower growth or more uncertainty trade at lower multiples.
Clearway Energy currently trades at a PE ratio of 42.3x. This is notably above the average PE of its industry, Renewable Energy, which stands at 16.2x. It is also higher than the peer group average of 55.5x. These metrics suggest the market sees reasons to pay a significant premium for Clearway, possibly due to its particular growth story or profitability profile.
To better understand whether this premium is warranted, Simply Wall St introduces a proprietary “Fair Ratio.” This Fair Ratio is calculated by weighing in factors such as Clearway’s expected earnings growth, profit margins, size, industry, and unique risk factors, rather than just making a simple comparison with other companies. Notably, the Fair Ratio for Clearway is assessed at 29.0x. Comparing this to its actual PE of 42.3x, the stock trades well above what would be considered a fair multiple for a company with its characteristics. This indicates that investors may be paying too much right now.
Result: OVERVALUED
NYSE:CWEN.A PE Ratio as at Sep 2025
PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.
Earlier we mentioned that there’s an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is your story about a company, where you combine your outlook on Clearway’s future, such as your assumptions for growth rates, margins, and risks, with a financial forecast and your own fair value estimate. By connecting the dots between what you believe will happen and what that means for the stock’s true worth, Narratives make investing more personal and actionable.
This approach is easy and accessible through Simply Wall St’s Community page, where millions of investors build and share their own Narratives. With Narratives, you can instantly compare your fair value to the market price and use that insight to decide whether to buy, hold, or sell, all while seeing updates any time major news or earnings are released. For example, some Clearway Energy investors are bullish, projecting a fair value as high as $40.00 per share based on aggressive growth, while others are more cautious, estimating just $34.00 based on lower earnings expectations and risk factors. Narratives help you anchor your decisions in a story you trust, keeping you nimble and informed as new information emerges.
Do you think there’s more to the story for Clearway Energy? Create your own Narrative to let the Community know!
NYSE:CWEN.A Community Fair Values as at Sep 2025
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.
Companies discussed in this article include CWEN-A.
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