Sunrun Inc. RUN is scheduled to release third-quarter 2024 results on Nov. 7, after market close. The company reported second-quarter earnings of 55 cents per share, which beat the Zacks Consensus Estimate of a loss of 26 cents.
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Sunrun has a four-quarter average earnings surprise of 79.87%. Let’s discuss the factors that are likely to be reflected in the upcoming quarterly results.
Sunrun Inc. Price and EPS Surprise
Sunrun Inc. price-eps-surprise | Sunrun Inc. Quote
Factors at Play
Solid solar energy as well as storage capacity installed, backed by steadily growing solar demand across the United States and improving storage attachment rates, must have boosted Sunrun’s third-quarter top-line performance.
A growing customer base is also likely to have favorably contributed to RUN’s revenues in the soon-to-be-reported quarter.
However, an increasing mix of subscribers results in less upfront revenue recognition, as revenues are recognized over the life of the Customer Agreement, typically 20 or 25 years. This might have had some adverse impact on the company’s third-quarter revenues.
Significant changes have occurred in the residential solar policy and pricing framework of California, which is one of RUN’s key markets and represents over 45% of its customer base. Changes to California’s net metering policy adopted in December 2022, with the new billing regime implemented in April 2023, present a significant shift in the financial benefits California customers receive from its solar systems. This might have limited the financial attractiveness of the company’s offerings in this market, particularly for solar-only systems. Resultantly, RUN might have witnessed lower solar installations in California, which is likely to have hurt the company’s quarterly revenues.
From the cost perspective, declining solar and storage equipment costs and operating leverage from volume growth are expected to have benefited RUN’s overall quarterly bottom-line performance.
However, high interest expenses and unimpressive revenue expectations are likely to have weighed on its earnings.
Q3 Expectations
The Zacks Consensus Estimate for third-quarter sales is pegged at $560.6 million, which suggests a decline of 0.5% from the year-ago reported number.
The Zacks Consensus Estimate for earnings is pegged at a loss of 16 cents per share, which implies a deterioration from earnings of 40 cents reported a year ago.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for RUN this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here, as you will see below.
Earnings ESP: RUN has an Earnings ESP of +12.57%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Currently, Sunrun carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Stocks to Consider
Below, we have mentioned the following players from the same sector that also have the right combination of elements to beat on earnings this reporting cycle.
SolarEdge Technologies SEDG is slated to report third-quarter 2024 results on Nov. 6, after market close. It has an Earnings ESP of +30.29% and a Zacks Rank of 3 at present.
The Zacks Consensus Estimate for third-quarter sales is pegged at $269.3 million, while that for earnings is pinned at a loss of $1.55 per share. The consensus estimate for loss has moved up 6 cents over the past 30 days.
Excelerate Energy EE is expected to report third-quarter 2024 results on Nov. 6, after market close. It has an Earnings ESP of +20.93% and a Zacks Rank of 2 at present.
The Zacks Consensus Estimate for sales is pegged at $208.3 million, while that for earnings is pinned at 32 cents per share. The company delivered a trailing four-quarter average earnings surprise of 1.73%.
Energy Transfer ET is set to report third-quarter results on Nov. 6, after market close. It has an Earnings ESP of +7.29% and a Zacks Rank of 3 at present.
The Zacks Consensus Estimate for sales is pegged at $24.23 billion, while that for earnings is pinned at 32 cents per share. The company delivered a trailing four-quarter average earnings surprise of 5.15%.
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