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Sunrun (RUN) to Report Q1 Earnings: Is a Beat in Store?

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Sunrun Inc. (RUN - Free Report) is set to release first-quarter 2019 results on May 8, after the market closes.
 
In the last reported quarter, the company witnessed a negative earnings surprise of 110.87%. Moreover, the company missed the Zacks Consensus Estimate in three of the trailing four quarters, the average negative surprise being 73.86%.
 
Let’s see how things are shaping up prior to this announcement.
 
Why a Likely Positive Surprise?
 
Our proven model shows that Sunrun is likely to beat earnings estimates in the first quarter. Notably, a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen.
 
Earnings ESP: Sunrun has an Earnings ESP of +49.21%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
 
Zacks Rank: The company sports a Zacks Rank #1, which along with a positive Earnings ESP increases the possibility of an earnings beat.
 
Conversely, we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
 
Sunrun Inc. Price and EPS Surprise
 

Sunrun Inc. Price and EPS Surprise | Sunrun Inc. Quote

Factors at Play

During the fourth quarter of 2018, Sunrun added more than 14,700 customers, representing 115 megawatts of deployments. Considering the increased traction of solar energy in the United States lately, we may expect the upcoming results to continue reflecting an impressive megawatt deployment growth for the company. In line with this, the company expects its deployments to be 83-85 megawatts during the to-be-reported quarter, indicating growth of 23.5% from the year-ago quarter’s reported figure.

Further, during the fourth quarter earnings call, Sunrun announced a large expansion with the Home Depot, which will allow the company to boost solar installations by offering solar and Brightbox battery services at Home Depot stores in 15 states, including California. As a result, the company expects the adoption rate of Brightbox batteries to increase further, which in turn should boost its top line in the first quarter.
 
Considering the aforementioned developments, the Zacks Consensus Estimate for first-quarter revenues of $152.9 million suggests a rise of 5.9% on a year-over-year basis.
 
Sunrun achieved on average 7% annual cost reductions for the last four years, driven by lower hardware, installations and overhead costs. To this end, we expect this trend to continue and positively impact bottom-line results in the to-be-reported quarter.
 
In line with this, the Zacks Consensus Estimate for Sunrun’s first-quarter earnings pegged at 32 cents implies an improvement of 28% from the figure reported in the year-ago quarter.
 
A Stock to Consider
 
Here is a player from the Solar industry that has the right combination of elements to post an earnings beat this quarter.
 
SunPower Corporation (SPWR - Free Report) has an Earnings ESP of +5.24% and a Zacks Rank #2. The company is scheduled to report first-quarter results on May 9. You can see the complete list of today’s Zacks #1 Rank stocks here.
 
Recent Solar Releases
 
First Solar Inc. (FSLR - Free Report) incurred a loss of 64 cents per share in first-quarter 2019, wider than the Zacks Consensus Estimate of a loss of 13 cents.
 
Enphase Energy (ENPH - Free Report) reported first-quarter 2019 adjusted earnings of 8 cents per share against the adjusted loss of a cent in the year-ago quarter.
 
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