The solar industry has been one of the top performing industries over the past year, as governments around the world have taken steps to strengthen clean energy infrastructure to address concerns about climate change. The United States plans to reach net zero emissions by 2050, while China plans to reach that level by 2060. Major European countries have also announced their intention to achieve carbon neutrality in the coming years. decades. A significant drop in the cost of harnessing solar power has been another major factor that has boosted the growth of the industry.
With the growing demand for solar power every day, many start-ups are capitalizing on the boom. However, some of these actions are making progress even with inadequate business models and product pipelines; they lack sufficient fundamental strength to justify their high valuations, we believe.
Sunnova Energy International, Inc. (NOVA) and VivoPower International PLC (VVPR) have delivered triple-digit returns over the past year. But they currently appear overvalued and given their minimal future growth prospects, they are best avoided now.
Sunnova Energy International, Inc. (NOVA)
NOVA provides residential solar and energy storage services and solar equipment maintenance assistance across the United States.
A few days ago, NOVA extended its solar and storage services to the District of Columbia. Nova will provide homeowners with access to all of its lending products, including its flagship solar-only system, Sunnova SunSafe solar + battery storage service, and SunSafe + supplemental battery service, providing affordable and integrated energy solutions to meet growing consumer demand.
However, despite this development, the company’s results for the third quarter ended September 30, 2020 are far from impressive. Its EBITDA declined 621.6% year-over-year to a negative $ 32.16 million in the third quarter (ended September 30, 2020). And its net loss rose 113.3% from a year ago to $ 73.29 million, resulting in a net loss per share of $ 0.73, up 17 , 7% over the same period.
The stock has gained 213.1% in the past year. In terms of 12 month forward price / sell, the stock is currently trading at 30.29x, 1166.3% above the industry average 2.39x. Analysts expect NOVA’s EPS to decline 966.7% year-over-year to a negative $ 0.26 in the quarter to be released (ended 31 December 2020).
NOVA’s POWR ratings dovetail with this grim outlook. POWR scores are calculated by considering 118 different factors, each factor being weighted to an optimal degree.
The stock has an overall rating of F, which equates to a strong sell in our proprietary rating system. NOVA has a D rating for stability, momentum and feeling, and an F for value and quality. It is currently ranked No. 51 in the energy and services industry, ranked F, and at 51 stocks.
In total, we rate NOVA on eight different levels. Beyond what we have stated above, we have also assigned NOVA ratings for growth. Get all NOVA reviews here.
VivoPower International PLC (VVPR)
VVPR is an international solar and critical energy services company. It provides solutions for the production and distribution of critical energy infrastructure, including the development, construction and sale of solar photovoltaic projects to a range of commercial and industrial customers. It operates through three segments: Critical Power Services, Solar Development and Corporate Office.
Despite an increase in revenue of 12% year-on-year to $ 48.70 million in the fiscal year ended June 30, 2020, VVPR recorded a net loss of $ 5.10 million, a loss net per share of $ 038.
The stock has gained 1,008.3% in the past year. In terms of 12-month rolling EV / EBITDA, the stock is currently trading at 142.26x, 1048.2% above the industry average 12.39x. Additionally, in terms of price / sell, the stock is currently trading at 3.81x, which is 58% above the industry average 2.41x.
VVPR’s poor outlook is also apparent in its POWR ratings. The stock has an overall F rating, which equates to a strong sell in our proprietary rating system. VVPR has a D rating for dynamics, stability and value, and F for quality. In the F-rated solar industry, with 17 stocks, it is ranked No. 14.
Click here to view additional POWR ratings for VVPR (Growth & Sentiment).
POWR scores are calculated by considering 118 different factors, each factor being weighted to an optimal degree.
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Shares of NOVA were trading at $ 47.99 per share on Tuesday afternoon, down $ 2.98 (-5.85%). Year-to-date, NOVA has gained 6.34%, compared to 5.08% for the benchmark S&P 500 during the same period.
About the Author: Rishab Dugar
Rishab is a financial journalist and investment analyst. His approach to investing is to focus on quality stocks, traded at a low price, with business models that he easily understands. Following…