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What happened

Shares of residential solar company Sunrun Inc (RUN 4.39%) jumped 17.4% in August, according to data provided by S&P Global Market Intelligence, after the company reported earnings that impressed investors. And that was no small feat in a month that saw most solar stocks plunging by double digits.

So what

Second quarter revenue of $122.5 million beat analyst estimates of $111.2 million and earnings of $0.31 per share easily passed the $0.51 loss that was expected. At a time when most companies are struggling to sell residential solar systems to customers Sunrun installed 65 MW of solar, 5 MW ahead of its estimate for the quarter.

The bad news is that Sunrun is using extremely rosy estimates to post the impressive numbers it's showing investors. At its core, Sunrun's costs were $3.67 per watt, much higher than $3.05 per watt at SolarCity and $2.94 per watt at Vivint Solar. Long-term, lower costs will be a big differentiator, and I think Sunrun's projections will prove more optimistic than reality.

Now what

Sunrun has been waiting in the wings as other solar companies have made strategic mistakes, and the first half of 2016 has seen that play to the company's advantage. Vivint Solar was dealing with the SunEdison acquisition, and now SolarCity is facing uncertainty as Tesla Motors tries to buy the company. Sunrun is left as a stable option for customers, but higher costs should be a concern for investors. That's what will keep me from being bullish on the stock right now.