Critical Analysis: Clearway Energy (NYSE:CWEN) versus DTE Energy (NYSE:DTE)

Clearway Energy (NYSE:CWEN) and DTE Energy (NYSE:DTE) are both oils/energy companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, earnings, valuation, profitability, risk and dividends.

Profitability

This table compares Clearway Energy and DTE Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Clearway Energy -7.11% -3.45% -0.85%
DTE Energy 9.23% 10.52% 3.04%

Risk and Volatility

Clearway Energy has a beta of 1.23, meaning that its share price is 23% more volatile than the S&P 500. Comparatively, DTE Energy has a beta of 0.22, meaning that its share price is 78% less volatile than the S&P 500.

Insider and Institutional Ownership

33.2% of Clearway Energy shares are owned by institutional investors. Comparatively, 70.2% of DTE Energy shares are owned by institutional investors. 0.2% of Clearway Energy shares are owned by insiders. Comparatively, 0.6% of DTE Energy shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and price targets for Clearway Energy and DTE Energy, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Clearway Energy 0 3 1 0 2.25
DTE Energy 0 4 5 0 2.56

Clearway Energy currently has a consensus target price of $16.50, indicating a potential downside of 25.00%. DTE Energy has a consensus target price of $137.56, indicating a potential upside of 2.64%. Given DTE Energy’s stronger consensus rating and higher probable upside, analysts plainly believe DTE Energy is more favorable than Clearway Energy.

Earnings and Valuation

This table compares Clearway Energy and DTE Energy’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Clearway Energy $1.05 billion 4.04 $52.00 million $0.46 47.83
DTE Energy $12.67 billion 2.03 $1.17 billion $6.30 21.27

DTE Energy has higher revenue and earnings than Clearway Energy. DTE Energy is trading at a lower price-to-earnings ratio than Clearway Energy, indicating that it is currently the more affordable of the two stocks.

Dividends

Clearway Energy pays an annual dividend of $0.80 per share and has a dividend yield of 3.6%. DTE Energy pays an annual dividend of $4.05 per share and has a dividend yield of 3.0%. Clearway Energy pays out 173.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. DTE Energy pays out 64.3% of its earnings in the form of a dividend. DTE Energy has increased its dividend for 8 consecutive years.

Summary

DTE Energy beats Clearway Energy on 14 of the 17 factors compared between the two stocks.

About Clearway Energy

Clearway Energy, Inc., through its subsidiaries, acquires, owns, and operates contracted renewable energy and conventional generation, and thermal infrastructure assets in the United States. As of December 31, 2018, it had contracted generation portfolio of 5,272 net megawatts (MWs) of wind, solar, and natural gas-fired power generation facilities, as well as district energy systems. The company also owns thermal infrastructure assets with an aggregate steam and chilled water capacity of 1,385 net MW thermal equivalents; and electric generation capacity of 133 net MWs. Its thermal infrastructure assets provide steam, hot water and/or chilled water, and electricity to commercial businesses, universities, hospitals, and governmental units. The company was founded in 2012 and is based in Princeton, New Jersey. Clearway Energy, Inc. is a subsidiary of Clearway Energy Group LLC.

About DTE Energy

DTE Energy Company engages in the utility operations. The company's Electric segment generates, purchases, distributes, and sells electricity to approximately 2.2 million residential, commercial, and industrial customers in southeastern Michigan. It generates electricity through fossil-fuel, hydroelectric pumped storage, and nuclear plants, as well as wind and other renewable assets. This segment owns and operates approximately 696 distribution substations and 442,700 line transformers. The company's Gas segment purchases, stores, transports, distributes, and sells natural gas to approximately 1.3 million residential, commercial, and industrial customers throughout Michigan; and sells storage and transportation capacity. This segment has approximately 19,800 miles of distribution mains; 1,305,000 service pipelines; and 1,273,000 active meters, as well as owns approximately 2,000 miles of transmission pipelines. Its Gas Storage and Pipelines segment owns natural gas storage fields, lateral and gathering pipeline systems, and compression and surface facilities, as well as has ownership interests in interstate pipelines serving the Midwest, Ontario, and northeast markets. The company's Power and Industrial Projects segment offers metallurgical coke; pulverized coal and petroleum coke to the steel, pulp and paper, and other industries; and power, steam and chilled water production, and wastewater treatment services, as well as supplies compressed air to industrial customers. It also owns and operates 5 renewable generating plants with a capacity of 217 MWs; 23 landfill gas recovery sites; and 10 reduced emissions fuel facilities. Its Energy Trading segment engages in power and gas marketing and trading; structured transactions; and the optimization of contracted natural gas pipeline transportation and storage positions. The company was founded in 1903 and is headquartered in Detroit, Michigan.

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