Technology

Why Is NRG Yield (CWEN) Up 0.8% Since Last Earnings Report?

A month has gone by since the last earnings report for NRG Yield (CWEN). Shares have added about 0.8% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is NRG Yield due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Clearway Energy's 2018 Earnings and Revenues Up Y/Y

Clearway Energy Inc. reported 2018 earnings of 46 cents per share against a loss of 16 cents a year ago. The year-over-year improvement was due to growth investments made in 2018 and higher wind production than 2017.
 
Total Revenues

The company's total revenues in 2018 were $1,053 million, up 4.4% from $1,009 million reported a year ago.

Highlights of the Release

Interest expenses in fourth quarter amounted to $104 million, increasing 55.2% from the year-ago level.

During the quarter, Clearway Energy issued $600 million of 2025 Senior Notes, a portion of which was utilized to fund the repurchase of $352 million of the 2019 and 2020 Convertible Notes tendered.

Segment Details

Conventional segment contributed $28 million compared with $33 million in the year-ago quarter.

Renewables segment reported a loss of $45 million compared with the prior-year figure of $49 million.

Thermal segment contributed $5 million, higher than the year-ago net income of $3 million.

Corporate segment reported a loss of $79 million, lower than the year-ago level of $84 million.

Financial Condition

Clearway Energy had cash and cash equivalents of $407 million as of Dec 31, 2018, up from $148 million in the corresponding period of 2017.

Long-term debt as of Dec 31, 2018 was $5,447 million, reflecting a decline from $5,659 million in the comparable year-ago period.

The company's net cash flow from operating activities during 2018 was $498 million compared with $517 million in 2017.

Guidance

Clearway Energy expects 2019 Adjusted EBITDA at $995 million and Cash Available for Distribution to be $270 million. Net income in 2019 is expected to be $165 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -83.33% due to these changes.

VGM Scores

Currently, NRG Yield has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise NRG Yield has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.