Sunnova Energy International Inc.’s (NYSE:NOVA) Profit Outlook

Sunnova Energy International Inc.’s (NYSE:NOVA): Sunnova Energy International Inc. provides residential solar and energy storage services in the United States. The US$1.4b market-cap posted a loss in its most recent financial year of -US$169.1m and a latest trailing-twelve-month loss of -US$189.4m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on NOVA’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for NOVA, its year of breakeven and its implied growth rate.

View our latest analysis for Sunnova Energy International

NOVA is bordering on breakeven, according to the 8 Renewable Energy analysts. They expect the company to post a final loss in 2022, before turning a profit of US$350m in 2023. NOVA is therefore projected to breakeven around 3 years from today. What rate will NOVA have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 59%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

NYSE:NOVA Past and Future Earnings June 3rd 2020
NYSE:NOVA Past and Future Earnings June 3rd 2020

Given this is a high-level overview, I won’t go into details of NOVA’s upcoming projects, however, bear in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing I would like to bring into light with NOVA is its debt-to-equity ratio of 197%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and NOVA has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of NOVA which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at NOVA, take a look at NOVA’s company page on Simply Wall St. I’ve also compiled a list of key aspects you should further research:

  1. Valuation: What is NOVA worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether NOVA is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Sunnova Energy International’s board and the CEO’s back ground.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Thank you for reading.