Shares of solar installer Sunrun Inc. (NASDAQ:RUN) jumped an impressive 13.6% in February, according to data provided by S&P Global Market Intelligence, as the market overall started to collapse. Shares have held their own, climbing another 4.6% in the first week of March.
There were a few competing narratives for investors to digest. One is that interest rates were starting to fall in February, a plunge that continues in March, and that helps Sunrun's long-term value. The company finances the residential solar systems it installs, so lower rates mean the contracted cash flow is worth more than if rates were higher. Last month, that overwhelmed a fairly disappointing fourth quarter.
On Feb. 27, Sunrun reported fourth-quarter earnings that showed revenue growth of just 1.6% to $243.9 million and earnings of just $0.10 per share. Analysts were expecting earnings of $0.12 per share.
What was surprising for Sunrun is that deployed solar was only up 1.7% to 116.6 megawatts (MW) following years of growth. It's possible that growth will be harder to come by for Sunrun in coming years.
Falling interest rates may be overwhelming investors' concern about Sunrun's growth and that's for good reason. The company should generate strong cash flow from the financing it does in 2020 if rates stay low. For renewable energy stocks, there's reason to be bullish as rates fall and that's why this may not be the end of Sunrun's push higher.