Governmental efforts worldwide to achieve carbon-neutrality, increasing oil prices, and the recent passage of a $1.75 trillion infrastructure bill, which provides significant funding and tax credits for the renewable energy and…
electric vehicle industries, bodes well for the solar industry. The global solar energy market is expected to grow at a 20% CAGR to $200 billion by 2026.
Although ongoing supply chain bottlenecks could affect the industry’s production slightly in the near term, rising government support should help the industry grow significantly in the long run. Investor interest in solar stocks is evident in the Invesco Solar Portfolio ETF’s (TAN) 5.7% returns over the past month, versus the SPDR S&P 500 Trust ETF’s (SPY) 3.3% gains.
However, solar stocks Sunrun Inc. (RUN – Get Rating), Sunnova Energy International Inc. (NOVA), Sunworks, Inc. (SUNW), and Solar Integrated Roofing Corporation (SIRC – Get Rating) are expected to remain under pressure in the near term due to their weak fundamentals and overvaluations. So, we think that they are best avoided now.
RUN is a San Francisco-based home solar, battery storage, and energy services company that designs, develops, installs, sells, owns, and maintains residential solar energy systems. The company markets and sells its products through a direct-to-consumer approach across online, retail, digital media, canvassing, field marketing, and referral channels, as well as its partner network.
On October 29, 2021, RUN expanded its program with SPAN, an energy equipment and solutions provider, to accelerate the transition away from fossil fuels and help customers electrify their homes and vehicles. Through the program, RUN will include SPAN home electrical panels as part of its home solar and battery offerings in select markets to drastically reduce installation hurdles when adopting on-site generation and other all-electric appliances.
For its fiscal third quarter, ended September 30, 2021, RUN’s loss from operations came in at $137.93 million, representing a 121.8% year-over-year decline. The company’s net loss increased 182.6% year-over-year to $241.33 million. Its EPS came in at $0.11 for the quarter, down 60.7% from the prior-year period.
Analysts expect RUN’s EPS to remain negative in the current year and next year. The stock missed consensus EPS estimates in three of the trailing four quarters.
Over the past nine months, the stock has declined 16.1% in price and closed yesterday’s trading session at $50.65. In terms of forward EV/Sales, RUN is currently trading at 11.57x, which is 462.1% higher than the 2.06x industry average. In terms of forward Price/Sales, RUN is currently trading at 6.63x, which is 303.7% higher than the 1.64x industry average.
RUN’s weak prospects are reflected in its POWR Ratings. The stock has an overall F rating, which equates to a Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
RUN has an F grade for Value, Quality and Stability, and a D grade for Momentum and Sentiment. Of the 18 stocks in the F-rated Solar industry, RUN is ranked #16. To see additional POWR Ratings for RUN’s Growth, click here.
Sunnova Energy International Inc. (NOVA)
NOVA is a residential solar and energy storage service provider that offers operations and maintenance, monitoring, repairs and replacements, equipment upgrades, on-site power optimization, and diagnostics services. The Houston, Tex.-based company operates a fleet of residential solar energy systems with a generation capacity of approximately 790 megawatts.
On November 10, 2021, NOVA and Brinks Home announced an exclusive partnership that allows NOVA to offer options from the Brinks Home portfolio of smart home security solutions and allow…
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