Sunrun Inc (RUN, Financial), a prominent player in the semiconductor industry, has recently experienced a notable fluctuation in its stock performance. With a current market capitalization of $3 billion and a stock price of $13.54, the company has seen a 1.28% decrease over the past week but an 11.31% increase over the last three months. This performance is intriguing, especially when considering the company's current GF Value of $26.06, down from a past GF Value of $31.08. Both the current and past GF Valuations suggest a "Possible Value Trap, Think Twice" scenario, indicating that investors should be cautious.
Overview of Sunrun Inc
Sunrun Inc specializes in the design, development, installation, sale, ownership, and maintenance of residential solar energy systems across the United States. The company operates by acquiring customers directly and through partnerships with various solar and strategic partners. Sunrun constructs these solar systems either independently or through partners, retaining ownership post-installation. Customers typically engage with Sunrun through long-term agreements spanning 20 to 25 years to utilize the solar energy systems. Additionally, Sunrun sells solar energy systems and related products directly to consumers.
Assessing Sunrun's Profitability
Despite its innovative business model, Sunrun's financial health shows areas of concern. The company's Profitability Rank stands at 4/10. It has an Operating Margin of -36.47%, which, although better than 11.96% of 987 companies in the industry, indicates significant losses relative to its revenue. Furthermore, its Return on Equity (ROE) and Return on Assets (ROA) are -24.96% and -7.15% respectively, positioning Sunrun in the lower echelons of its industry peers. The Return on Invested Capital (ROIC) is also low at -4.12%. These figures reflect a company struggling to convert its business operations into net profits, despite being operational and profitable in 5 out of the past 10 years.
Growth Trajectory of Sunrun
Sunrun's Growth Rank is considerably better at 8/10. The company has demonstrated a robust 3-Year Revenue Growth Rate per Share of 16.40% and a 5-Year Revenue Growth Rate per Share of 11.50%. These rates are commendable and better than a significant portion of their industry counterparts. However, the 3-Year EPS without NRI Growth Rate stands at -19.00%, indicating challenges in maintaining earnings growth. The estimated Total Revenue Growth Rate for the next 3 to 5 years is 9.27%, suggesting a positive outlook but with cautious optimism given the mixed financial health indicators.
Investor Confidence and Market Position
Noteworthy investors in Sunrun include Jeremy Grantham (Trades, Portfolio) holding 14,626,019 shares (6.6%), George Soros (Trades, Portfolio) with 2,080,941 shares (0.94%), and Steven Cohen (Trades, Portfolio) owning 2,071,138 shares (0.93%). These significant investments by prominent market players may indicate a level of confidence in the company's future prospects despite current financial challenges.
Competitive Landscape
Sunrun faces stiff competition within the semiconductor industry. Its main competitors include NEXTracker Inc (NXT, Financial) with a market cap of $7.66 billion, JinkoSolar Holding Co Ltd (JKS, Financial) valued at $1.16 billion, and Shoals Technologies Group Inc (SHLS, Financial) with a market cap of $1.11 billion. These companies represent a diverse range of capabilities and market positions, providing Sunrun with both challenges and benchmarks for measuring its performance and strategic positioning.
Conclusion
In conclusion, Sunrun Inc presents a mixed bag of opportunities and challenges. While the company shows promising growth potential and investor interest, its profitability metrics and financial health raise concerns. The stock's recent performance, characterized by a significant three-month gain amidst a broader context of caution as suggested by the GF Value, indicates a complex investment landscape. Investors should weigh these factors carefully, considering both the growth prospects and the financial stability of the company.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
