Q3 Earnings Preview for Sunrun (NasdaqGS:RUN)

in EARNINGS/INVESTING IDEAS by

Sunrun Inc. (NasdaqGS:RUN) is scheduled to report Q3 earnings results after markets close for trading on November 5, 2020.

The company is expected to report earnings of $0.02/share on revenue of $209.4 million. The consensus earnings per share (EPS) of $0.02/share is based on a poll of 10 analysts and represents a decline in eps of −91.4% over the same quarter last year, when the company reported earnings of $0.23/share.

The revenue forecast of $209.4 million based on a poll of 10 analysts implies a year-over-year (YoY) decline in revenue of −2.9%. Last year the company reported $215.5 million in revenue for the quarter.

Expected to report EPS contraction of −91.4% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $209.38 $215.54 −2.9%
EPS $0.02 $0.23 −91.4%

Earnings Call Trends

Management’s track record for providing useful guidance is absolutely dismal historically, and there is no good reason to believe things will be any different this quarter. The company has missed earnings expectations every quarter for the last 7 quarters tracked, except for Q3 2019.

What are your expectations from Sunrun Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.03 -$0.11 −423.9% Missed
Q1, 2020 $0 -$0.23 −43,496.2% Missed
Q4, 2019 $0.20 $0.10 −49.6% Missed
Q3, 2019 $0.04 $0.23 428.5% Beat
Q2, 2019 $0.07 -$0.01 −114.8% Missed
Q1, 2019 $0.17 -$0.12 −168.6% Missed
Q4, 2018 $0.17 -$0.05 −128.6% Missed
Q3, 2018 $0.17 -$0.03 −117.2% Missed

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, 2020, the stock price reacted by falling −7.9%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 10, 2020 $46 $42.37 −7.9% Decline
May 6, 2020 $13.25 $13.81 4.2% Increase
February 27, 2020 $20.91 $19.34 −7.5% Decline
November 12, 2019 $14.43 $13.77 −4.6% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.30, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.30 implies a 1.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

Sunrun Inc. is currently trading at $56.15/share, up 2.7% for the day. The company is trading at approximately 68.4% of its 52-week high of $82.42/share. The company’s stock price is up 32.5% since the last earnings report and down −1.2% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 36.86 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:RUN Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −356,750.43 and a forward P/E multiple of −626.90.

Sunrun Inc.’s current share price also implies a price-to-book (P/B) multiple of 12.45. The following table summarizes some other key fundamental ratios:

Data as of October 28, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $56.15
P/E Ratio −356,750.4x
P/E Ratio (Fwd) −626.9x
Price To Sales 12.9x
Total Debt / Total Capital 20.6%
Levered Free Cash Flow -$1.103 billion
EV / EBITDA −294.5x

Finbox

Sunrun Inc. is a large-cap stock with a market capitalization of $10.72 billion and a total enterprise value of $14.241 billion. The company operates in the Industrials sector and the Electrical Equipment industry.

Sunrun Inc. engages in the design, development, installation, sale, ownership, and maintenance of 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. In addition, the company offers battery storage along with solar energy systems. Its primary customers are residential homeowners. 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.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.