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SunRun Gains on Q1 Preliminary Results, Cancels 2020 View

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Sunrun Inc RUN recently released its preliminary unaudited financial results forthe first quarter of 2020. Notably, the preliminary results reflect improved megawatts deployed and cash position for the company.

This residential solar energy service provider is expected to report its full first-quarter results in May.

Share Price Gets a Boost

Sunrun’s recently announced preliminary results boosted investors’ confidence. As a result, share price of this company rose a solid 14.9% to close at $11.47 on Apr 8, following the announcement on Apr 6, after market close.

Q1 Preliminary Numbers in Detail

Per the recent announcement, Sunrun deployed 97.4 megawatts (MW) of its systems in the first quarter of 2020. This reflects an improvement of 13.3% from the prior-year quarter’s equivalent figure. However, it is lower than the company’s earlier provided guidance of102 MW in the first quarter.
Moreover, the company ended the quarter with $366 million in total cash, reflecting an increase of 18% from cash generated in first-quarter 2019.

The company withdrew its guidance issued on Feb 27, 2020 on account of the ongoing uncertainty related to the impact of coronavirus on its business.

Factors Driving Q1 Results

The coronavirus-led turmoil has hit solar installers hard, given dearth of demand. Interestingly, its direct business, despite installing less than expected due to the pandemic’s impact, Sunrun completed more installations in the second half of March than it did in the first half. This must have contributed to improved first-quarter MW deployment when compared with the prior-year quarter’s figure.

Such improved deployments must have also boosted its cash position.

What Lies Ahead?

Sunrun has been taking necessary initiatives to significantly lower its expenses, primarily from various labor-related cost actions that reduce these quarterly costs by $30 million compared to first-quarter levels.

Following these expense reductions, the company estimates that in a reasonable downside scenario on account of coronavirus impact, volumes may decline approximately 50% from the prior-year levels for the next two quarters. As a result of this, consumption of cash would be limited to $30 million per quarter or less, without any capital market activities.

Moreover, to promote social distancing, Sunrun has enabled its entire salesforce to complete consultations in a virtual setting. This transition toward a digital model will allow the company to realize sustainable reductions in customer acquisition costs.

Zacks Rank

Sunrun currently has a Zacks Rank #3 (Hold).

A few better-ranked stocks in the same space are Enphase Energy (ENPH - Free Report) , SolarEdge Technologies SEDG and SunPower (SPWR - Free Report) . While Enphase Energy sports a Zacks Rank #1 (Strong Buy), SolarEdge and SunPower carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Enphase Energy surpassed the Zacks Consensus Estimate for earnings in the past four quarters, with positive surprise of 34.16%, on average. Its consensus estimate for 2020 earnings indicates year-over-year growth of 26.3%.

SolarEdge surpassed the Zacks Consensus Estimate for earnings in the past four quarters, with positive surprise of 10.28%, on average. Its consensus estimate for 2020 earnings indicates year-over-year growth of 18.2%.

SunPower surpassed the Zacks Consensus Estimate for earnings in the past four quarters, with positive surprise of 182.5%, on average. Its consensus estimate for 2020 sales indicates year-over-year growth of 1.4%.

Price Performance

Shares of Sunrun have lost 27.6% against the industry's 2.2% growth over the past year.

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