I am assigning Sunrun (NASDAQ:RUN) a negative risk/reward rating due to its business model. The business model produces extraordinary levels of negative free cash flow with no evidence of increased operating leverage as losses are expanding
Sunrun Is Flying Too Close To The Sun
Summary
- In its recent Q2 fiscal 2021 earnings release, Sunrun reported an impressive 121% revenue growth.
- The company now expects its installed solar energy systems growth to be 30% for 2021, up from the prior 25% to 30% forecast.
- Sunrun’s business model is generating increasing levels of negative free cash flow and operating losses.
- Rising debt levels and associated interest expense are funding the increasing cash outflows.
- Sunrun is a leader in the rapidly growing residential solar energy market which earns it a spot on the growth stock watchlist.
I am the co-founder and CEO of stoxdox, Inc., a universal platform for professional quality stock and investment research. I started in the investment industry in 1996 and spent the first half of my career as a portfolio manager at Merrill Lynch then UBS Financial Services. Later, I founded and served as the portfolio manager at both Kapp/Scanlon Financial Group and Oasis Capital. I am a CFA® charterholder and earned a BS in Industrial Management and a BS in Economics at Carnegie Mellon University. My experience combined with a strong foundation in strategic management and economics offers a uniquely full-spectrum, full-cycle, and global perspective.
Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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