Shares of solar installer Sunrun Inc (RUN 6.91%) fell as much as 19.8% in early trading Friday after reporting fourth-quarter 2019 results. It didn't help that the overall market was down big again today, but earnings certainly didn't give investors much to buy into.
At 3:35 p.m. EST, Sunrun's shares have recovered a bit but were still down 7% on the day.
Revenue in the quarter increased just 1.6% versus a year ago, to $243.9 million, but the company did swing from a net loss of $5.9 million to net income of $12.5 million, or $0.10 per share. Analysts were expecting $225.8 million of revenue and $0.12 per share in earnings, so the bottom line missed expectations.
One of the reasons revenue beat expectations was a higher percentage of installations paying cash upfront rather than leasing a solar system over 20 years or more. This generates earlier revenue but a lower margin long term and accounts for some of both the revenue beat and the earnings miss.
One thing that jumped out to me is that megawatts deployed increased only 1.7% from a year ago to 116.6 megawatts (MW). Sunrun's business is no longer growing at a high rate, and that could be a concern for renewable energy investors.
Sunrun's business is built on growing solar installations and getting customers to sign up for lucrative long-term financing deals. If both of these are slowing, then the company may not be as valuable long term.
One quarter doesn't make a trend, but investors should watch where installations and leases go over the next few quarters to see how the business is changing long term.