Sunrun Inc.

RUN Details

Sunrun Inc. (NASDAQ: RUN) is the top solar company player in the U.S. with an entire focus on residential solar systems. It provides home solar, battery storage, and energy services to its customers present across 175 cities in 22 states and Puerto Rico.

H1FY21 Results Performance (For the Period Ended 30 June 2021)

Revenue Grew Robustly by 87.73% YoY: RUN has delivered  solid revenue growth of 87.73% YoY to $735.96 million for the interim period. Net subscriber value stood at $5,574 in Q2FY21 and the generation of the total value was $122 million during Q2FY21.

Customer Additions: Customer additions during Q2FY21 remained healthy as it added 26,110 customers, including 21,894 subscriber additions that took its customer base to 599,743 as of 30 June 2021.  

Increased Net Loss: Total operating expenses in the first half increased significantly by 96.14% YoY to $1,056.25 million. Resultantly, net loss attributable to common stockholders increased to $65.03 million from $41.52 million in the PCP.

Consolidated Income Statement (Source: Company Reports)

Recent Update

Accomplishment of Solar Installation for Renters in San Joaquin Valley: As per the press release dated 16 August 2021, Self-Help Enterprises and Sunrun celebrated the completion of a new solar installation to 60 affordable rental homes at Sand Creek rental community in the San Joaquin Valley.

Appointment of CEO:  As per the press release dated 5 August 2021,  Mary Powell, a Sunrun Director, and former President and CEO of Green Mountain Power, would take over the charge of the company’s next Chief Executive Officer, effective August 31, 2021. Powell will succeed the company’s co-founder Lynn Jurich who will move to Executive Co-Chair of the Board.

Created a Partnership with Ford Motor Company: The company, on 19 May 2021, declared that it formed a partnership with Ford Motor Company to assist in the installation of the 80-amp Ford Charge Station Pro and home integration system for the all-electric F-150 Lightning.

Outlook

The company highlighted that it is progressing as per the plan to deliver a break-out year. Resultantly, the management raised its growth guidance in solar energy capacity installed to 30% from its earlier prediction of 25% to 30% growth for 2021.

Additionally, it now expects to achieve a total value generated between $700-750 million in 2021  mainly due to the adjustments pertaining to the effects of accelerating growth and timing of cost recognition. It reiterated garnering cost synergies resulting from the acquisition of Vivint Solar to be around $120 million in run-rate synergies by the end of 2021.

Key Risks

The company’s operations are exposed to risks of natural calamities. The COVID-19 pandemic has had as well as could continue to have adverse impact on the company’s business, operations, as well as the markets and communities in which it carries out the operations.

Valuation Methodology: EV/Sales Based Relative Valuation (Illustrative)

Technical Overview:

Chart:

Source: REFINITIV

Note: Orange Color Line Reflects RSI (14-Period)

Stock Recommendation

The stock has been valued using an EV/Sales multiple-based illustrative relative valuation and the target price reflects a rise of low double-digit (in % terms). A slight discount to EV/Sales Multiple (NTM) (Peer Average) has been applied considering its higher operating costs, negative earnings in Q2FY21 as well as higher debt levels.

For the purposes of relative valuation, we have taken peers like Vicor Corp (VICR.OQ), Beam Global (BEEM.OQ), among others.

Considering its acceleration in sales volumes to new records in Q2FY21 along with record installation in Q2FY21, upgrade in guidance along with expanding market reach, healthy liquidity position, and decent growth outlook, we give a “Buy” recommendation on the stock at the current market price of US$44.59, up by 5.86% on 23^rd August 2021.

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined:-

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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