Please ensure Javascript is enabled for purposes of website accessibility

Why Sunrun Inc's Shares Plunged 19.8% Today

By Travis Hoium - Feb 28, 2020 at 3:27PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Earnings didn't shine bright for Sunrun Inc.

What happened 

Shares of solar installer Sunrun Inc (RUN -0.55%) 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. 

So what

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.

Large solar installation on a home's roof.

Image source: Getty Images.

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. 

Now what

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. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Sunrun Inc. Stock Quote
Sunrun Inc.
$25.22 (-0.55%) $0.14

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.