Sunrun Q3 Earnings: Is RUN Expensive at 327.1x Forward P/E?

in EARNINGS/INVESTING IDEAS by

Sunrun Inc. is a small-cap stock with a market capitalization of $1.697 billion and a total enterprise value of $4.309 billion. The company operates in the Industrials sector and Electrical Equipment industry.

Sunrun Inc. (NASDAQGS:RUN) is scheduled to report Q3 earnings results on November 12, 2019. The company is expected to report revenue of $203.0 million. The revenue forecast of $203.0 million based on a poll of 7 analysts implies a year-over-year (YoY) decline of -1.0%. Last year the company reported $205.0 million in revenue for the quarter.

Expected to report EPS of $0/share for Q3, 2019
Metric Expected Prior Year YoY Change
Revenue $202.99 $204.96 -1.0%
EPS $0 -$0.03 NM

Earnings Call Trends

Historically, management has exceeded analyst expectations 2 out of the last 8 tracked quarters, and missed expectations 6 quarters.

Analyst Expected vs Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2019 $0.08 -$0.01 NM Missed
Q1, 2019 $0.10 -$0.12 NM Missed
Q4, 2018 $0.19 -$0.05 NM Missed
Q3, 2018 $0.16 -$0.03 NM Missed
Q2, 2018 $0.19 $0.06 -68.4% Missed
Q1, 2018 $0.09 $0.25 177.8% Beat
Q4, 2017 $0.27 $0.25 -7.8% Missed
Q3, 2017 $0.21 $0.25 16.6% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2019, the stock price did not react much to the update.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-08-07 $18.72 $18.74 0.1% Increase
2019-05-08 $16.75 $15.53 -7.3% Decline
2019-02-28 $15.59 $15.96 2.4% Increase
2018-11-07 $12.97 $12.59 -2.9% Decline

Fundamentals And Technical Analysis

Sunrun is currently trading at $14.43/share, down -2.1% for the day. The company is trading at approximately 67.4% of its 52 week high of $21.42/share. The company’s stock price is down -22.9% since the last earnings report and down -5.5% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 35.56 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

The current share price implies a price-to-earnings (P/E) multiple of -6.0x and a forward P/E multiple of 327.1x.

Sunrun’s current share price also implies a price-to-book (P/B) multiple of 1.9x. The following table summarizes some other key fundamental ratios:

Data as of November 11, 2019
Metric Value
Last Fiscal Period FY2019.Q2
Period End Date June 30, 2019
Stock Price (Current) $14.43
P/E Ratio -6.0x
P/E Ratio (Fwd) 327.1x
PEG Ratio 0.5
Total Debt to Capital (%) 50.4%
Levered Free Cash Flow -$925.3 million
Enterprise Value / EBITDA 134.2x

Company Profile: Sunrun Inc.

Sunrun Inc. designs, develops, installs and maintains residential solar energy systems in the United States. It also sells solar energy systems and products, such as panels and racking, as well as solar leads generated to customers. The company markets and sells its products through direct-to-consumer approach across online, retail, mass media, digital media, canvassing, field marketing, and referral channels, as well as its partner network.

Sunrun Inc. was founded in 2007 and is headquartered in San Francisco, California.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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