Sunrun (RUN) Could Be 49% Undervalued Following Its Slide Before Earnings

Sunrun (RUN) drew attention after its stock declined 3.31% in the latest session while major indexes gained, ahead of an earnings report on August 5 that is expected to show lower EPS and higher revenue.

See our latest analysis for Sunrun.

The latest 3.51% one day share price decline to US$9.63 comes on top of a 15.82% 7 day and 28.61% 30 day share price fall, while the 1 year total shareholder return is down 10.42%. This suggests momentum has been fading for Sunrun as investors reassess earnings risk and revenue expectations.

If earnings volatility in solar is making you look wider, this could be a useful time to scan other power related beneficiaries through the 34 power grid technology and infrastructure stocks

After Sunrun's sharp pullback and with the stock trading well below the average analyst price target of US$18.84, the key question is where fair value sits within that wide gap before earnings reset expectations again.

Most Popular Narrative: 48.9% Undervalued

Against Sunrun's last close at US$9.63, the most followed narrative puts fair value at US$18.84, which implies a large valuation gap based on long term cash generation potential.

Sunrun is rapidly scaling its storage and grid services offerings, enrolling a growing portion of its customer base (currently ~35% of 200,000 batteries, aiming for 10 GWh of dispatchable energy by 2029), enabling significant recurring revenue growth and expanded margin opportunities as demand for grid support rises. This will positively impact long term revenue and net margins.

Read the complete narrative.

Curious what kind of revenue mix, margin path, and future earnings multiple are baked into that fair value. The narrative leans on measured revenue growth, thinner margins, and a higher future P/E to bridge today’s share price and that US$18.84 figure.

Result: Fair Value of $18.84 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, Sunrun's narrative also hinges on policy support and access to affordable capital, and setbacks on either front could quickly challenge those fair value assumptions.

Find out about the key risks to this Sunrun narrative.

Next Steps

Given this mix of concern and optimism around Sunrun, it may be helpful to review the balance of risks and rewards yourself. You can start by weighing the 3 key rewards and 3 important warning signs.

Looking for more investment ideas beyond Sunrun?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

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