The long-term prospects of alternative energy player Clearway Energy CWEN may still be perplexing but unfortunately, there may be more short-term risk ahead landing its stock a Zacks Rank #5 (Strong Sell) and the Bear of the Day.
After widely missing earnings expectations for two consecutive quarters investors may want to curb their enthusiasm for Clearway’s luring 6.34% annual dividend yield amid weak renewable resource conditions and lower natural gas prices.
Image Source: U.S. Energy Information Administration
Weak Q3 Results: Notably, the Zacks Alternative Energy-Other Industry is in the bottom 39% of over 250 Zacks industries and Clearway’s Q3 results in November alluded to a tougher operating environment.
While Q3 sales of $371 million topped estimates by 8% earnings of $0.03 a share fell a very concerning -94% below expectations of $0.55 a share. This comes after Q2 earnings of $0.33 a share missed the Zacks Consensus of $0.55 a share by -40% in August.
Image Source: Zacks Investment Research
Weaker Outlook: Largely attributing to Clearway’s strong sell rating, annual earnings estimates for fiscal 2023 are down -10% over the last 60 days while FY24 EPS estimates have fallen -11%.
Image Source: Zacks Investment Research
On top of this, Clearway’s stock is already down -21% this year to vastly underperform the broader indexes and trail its Zacks Subindustry’s -14%.
Image Source: Zacks Investment Research
Takeaway
While it’s far too soon to call Clearway Energy’s stock a value trap, investors may want to think twice before investing in the company at the moment considering its lucrative dividend yield but poor performance of late.
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