4 solar actions to avoid like the plague in November


Government efforts around the world to achieve carbon neutrality, rising oil prices and the recent passage of a $ 1.75 trillion infrastructure bill, which provides for significant funding and tax credits for renewable energies and electric vehicles, which bode well for the solar industry. The global solar energy market is expected to grow at a 20% CAGR to $ 200 billion by 2026.

While continued supply chain bottlenecks may affect industry output slightly in the short term, increased government support is expected to help the industry grow significantly in the long term. Investor interest in solar stocks is evident in the Invesco Solar Portfolio ETFs (BRONZER) 5.7% returns over the past month, vs. SPDR S&P 500 Trust ETF (TO SPY) 3.3% of earnings.

However, Sunrun Solar Inc. (CLASSES), Sunnova Energy International Inc. (NOVA), Sunworks, Inc. (SUNW) and Solar Integrated Roofing Corporation (SIRC) should remain under pressure in the short term due to weak fundamentals and overvaluations. So, we think it is better to avoid them now.

Sunrun Inc. (CLASSES)

RUN is a San Francisco-based solar energy, battery storage and home energy services company that designs, develops, installs, sells, owns and services residential solar energy systems. The company markets and sells its products through a direct-to-consumer approach through online, retail, digital media, door-to-door sales, field marketing and referral channels, as well as its network of partners.

On October 29, 2021, RUN expanded its program with SPAN, an energy equipment and solutions provider, to accelerate the transition from fossil fuels and help customers electrify their homes and vehicles. Through the program, RUN will include SPAN home electrical panels as part of its home solar power and battery offerings in select markets to significantly reduce installation barriers when adopting on-site generation and production. ‘other fully electric appliances.

For its fiscal third quarter, ended September 30, 2021, RUN’s operating loss amounted to $ 137.93 million, down 121.8% year-over-year. The company’s net loss increased 182.6% year-on-year to $ 241.33 million. Its EPS was $ 0.11 for the quarter, down 60.7% from the prior year period.

Analysts expect RUN’s EPS to remain negative for the current year and next year. The stock has missed consensus estimates from BPA in three of the past four quarters.

In the past nine months, the stock has fallen 16.1% and closed yesterday’s trading session at $ 50.65. In terms of EV / futures sales, RUN is currently trading at 11.57x, which is 462.1% above the industry average 2.06x. In terms of futures price / sales, RUN is currently trading at 6.63x, which is 303.7% above the industry average of 1.64x.

RUN’s poor outlook is reflected in its POWR odds. The stock has an overall F rating, which equates to a strong sell in our proprietary rating system. POWR scores are calculated by considering 118 separate factors, each factor being weighted to an optimal degree.

RUN has an F rating for value, quality and stability, and a D rating for momentum and sentiment. Of the 18 stocks listed as F Solar industry, RUN is ranked # 16. To see additional POWR notes for RUN growth, Click here.

Sunnova Energy International Inc. (NOVA)

NOVA is a residential solar energy and energy storage service provider that provides operations and maintenance, monitoring, repair and replacement, equipment upgrades, energy optimization. on-site power supply and diagnostics. The Houston, Texas-based company operates a fleet of residential solar power systems with a generating capacity of approximately 790 megawatts.

On November 10, 2021, NOVA and Brinks Home announced an exclusive partnership that allows NOVA to offer options from the Brinks Home portfolio of smart home security solutions and to Brinks Home dealers and authorized representatives to offer the suite of services. solar, battery and energy from SUN. to their customers. NOVA’s operating loss for its third fiscal quarter, ended September 30, 2021, compared to $ 1.65 million in operating income for the prior year period. The company’s net loss was $ 25.92 million for the quarter, down 64.6% from the prior year period. Its loss per share fell 65.8% year-on-year to $ 0.25.

NOVA’s EPS is expected to remain negative over the next few quarters of the current year and into the next year. It missed consensus EPS estimates in each of the following quarters.

NOVA stock has fallen 8.8% in the past nine months and closed yesterday’s trading session at $ 38.88. NOVA’s EV / Futures 31.19x is 598.5% higher than the industry average of 4.46x. In terms of futures price / sales, NOVA is currently trading at 18.02x, which is 627.8% above the industry average 2.48x.

NOVA’s POWR ratings dovetail with this grim outlook. NOVA has an F rating for value and quality and a D rating for momentum and stability. The action is ranked 15th in the Solar industry.

In addition to the POWR ratings that I have highlighted, one can see NOVA’s ratings for growth and feeling here.

Sunworks, Inc. (SUNW)

SUNW in Roseville, california, provides photovoltaic power systems for the agricultural, commercial, industrial, public and residential markets. The company also designs, finances, integrates, installs and manages systems ranging in size from 2 kilowatts for residential loads to multi-megawatt systems for larger projects.

On August 26, 2021, SUNW signed an agreement with CBG Building Company to supply a 752.4 kW solar carport system for Orchard Park, a 1,549 bed student housing project on the UC Davis campus. This project will allow SUNW to expand its reach across California, accelerating its deployment of clean, renewable energy.

For its fiscal third quarter, ended September 30, 2021, SUNW’s operating loss increased 139.6% year-over-year to $ 6.46 million. The company’s net loss amounted to $ 6.46 million, up 126.5% from the prior year period. And its loss per share rose 41.2% year-on-year to $ 0.24.

Analysts expect SUNW’s EPS to remain negative for the next several quarters of this year and next year. He missed the street EPS estimates during each of the last four quarters and is expected to decline at a rate of 126.4% per year over the next five years.

Over the past nine months, SUNW shares have fallen 56.3% and closed yesterday’s trading session at $ 5.06.

It’s no surprise that SUNW has an overall rating of F, which equates to a strong sale in our POWR rating system. The action is ranked last in the 18 actions Solar industry. SUNW has an F rating for value, quality, stability and feeling. Click here to see additional POWR ratings for SUNW’s momentum and growth.

Solar Integrated Roofing Corporation (SIRC)

Based in El Cajon, California SIRC operates as an integrated solar energy, HVAC and single source roofing systems installation company. It offers the sale and installation of solar power systems, battery back-up and electric vehicle charging stations for roofing, HVAC and related electrical subcontracting work. It provides services to commercial and residential facilities and properties.

On November 24, 2021, USA Solar Networks, a subsidiary of SIRC, launched a new sales program targeting American poultry farmers to shift them to solar and alternative energy solutions for their energy-intensive operations. In addition, the United States Department of Agriculture’s Rural Energy for America (REAP) program announced a subsidy of up to 25% of the cost of the solar project to eligible farmers. SIRC expects strong demand from farmers in the coming months.

In the past nine months, the stock has fallen 69.4% and closed yesterday’s trading session at $ 0.42. The SIRC’s 11.27-fold 12-month rolling EV / Sales is 435.9% higher than the industry average 2.10 times. In rolling 12-month price / sell terms, the SIRC is currently trading at 3.82x, which is 131.2% higher than the 1.65x industry average of 1.65x.

SIRC’s POWR ratings reflect this grim outlook. The stock has an overall rating of F, which equates to a strong sell in our proprietary rating system.

The stock has an F rating for value, quality and stability, and a D rating for growth and momentum. Click here to see the additional note for SIRC sentiment. SIRC is ranked 17th in the Solar industry.

RUN shares were trading at $ 49.93 per share on Wednesday afternoon, down $ 0.72 (-1.42%). Year-to-date, RUN is down -28.03%, compared to a 26.56% increase in the benchmark S&P 500 over the same period.

About the Author: Sweta Vijayan

Sweta is an investment analyst and journalist with a particular interest in researching market inefficiencies. She is passionate about educating investors so that they can be successful on the stock market. Following…

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