Demand for solar panels could rise as more people buy electric cars.
Frederick Florin/AFP via Getty Images
Sunrun, the largest solar-panel installer in the United States, is growing faster than the company had expected at the start of the year.
After reporting first-quarter financial results late on Wednesday, Sunrun increased its forecast for growth in installations in 2021 to a range of 25%-30%, up from 20%-25%.
The stock was up 6% in early trading on Thursday. Sunrun posted a loss of 18 cents a share in the quarter, better than the 25-cent loss that analysts had expected.
Sunrun’s (RUN) business model can make the company’s performance difficult to judge by traditional earnings metrics. It tends to own the panels it places on customer roofs, leasing them to customers on a monthly basis. That means its up-front costs are high but longer-term cash flows can be substantial.
On one metric, the value of each Sunrun customer fell in the quarter. Its net subscriber value—the average value of each client it added minus the cost of adding that customer—declined to $8,197 from $9,051 in the fourth quarter of 2020. The company added 23,556 customers, about as many as it added in the fourth quarter.
Still, analysts were enthusiastic about the company’s expected growth rate for the rest of the year and its dominant position in its niche of the market. After acquiring rival Vivint Solar last year, Sunrun is the clear leader in installations.
The company now has more than 573,000 customers, and it expects to be able to cross-sell them on various products as more services move to electric power. The company expects to more than double its battery installations in 2021 relative to 2020, for instance. It also stands to profit as more Americans buy electric vehicles.
“Homes with electric vehicles consume approximately double the amount of electricity,” wrote Evercore analyst James West, who rates the stock at Outperform. “Therefore Sunrun can help consumers and the grid meet this higher demand by utilizing home solar and batteries instead of adding more strain onto the electric grid.”
Sunrun’s ability to ramp up battery installations is somewhat constrained by limitations on supplies. “The bad news is we could be growing that even faster if not for the tightness in the market,” said Sunrun Chairman Edward Fenster on the company’s earnings call. “And one impact of the tightness is that end pricing for batteries has not fallen alongside [made-to-fit] prices for those batteries. We do forecast significant increases in both supply and demand of batteries with supply increasing a little faster than demand over the near term, which should help a little bit.”
The company doesn’t expect to be hampered by other supply-chain bottlenecks in the solar industry, which have caused stocks such as Solaredge (SEDG) in the industry to slump in recent days. “Across the rest of the supply chain, we feel comfortable that we’re well insulated to the supply chain situation that some manufacturers are highlighting,” said CFO Tom VonReichbauer. One reason for that is “we sit in a pretty important customer position for these companies and believe that puts us in a strong position in their pecking order.”
Write to Avi Salzman at [email protected]
