Investment Thesis
Sunrun exhibits strong top-line growth (45% revenue, 64.5% net income), but the company reports negative operating income (-$43.5M), indicating the core business is unprofitable. Combined with extreme leverage (4.43x debt-to-equity) and anemic free cash flow generation ($9.1M on $722M revenue, 1.3% margin), the company faces structural profitability and financial stress despite surface-level growth metrics.
Strengths
- Strong revenue growth of 45% YoY demonstrates market demand and scaling
- Net income positive and growing faster than revenue (64.5% YoY growth)
- Adequate cash position of $679.6M provides short-term liquidity buffer
- Net profit margin of 23.2% shows some profitability at bottom line
Risks
- Negative operating income (-$43.5M, -6.0% margin) indicates core business is unprofitable before financing
- Extreme leverage at 4.43x debt-to-equity with $14.8B long-term debt creates debt service vulnerability
- Critically weak cash generation with only $10.6M operating cash flow (1.5% of revenue) raises sustainability concerns
- Very low returns metrics (ROE 5.0%, ROA 0.7%) inconsistent with risk profile from high leverage
- Quick ratio at 1.09x approaching concerning levels; minimal cash cushion relative to short-term obligations
Key Metrics to Watch
- Operating income trend - must achieve and sustain profitability at operating level
- Free cash flow and operating cash flow conversion - current generation is insufficient for debt service
- Debt reduction progress and leverage ratio - 4.43x is unsustainable long-term
- Interest coverage ratio improvement - currently not disclosed, likely concerning given negative operating income
Financial Metrics
Revenue
722.2M
Net Income
167.6M
EPS (Diluted)
$0.62
Free Cash Flow
9.1M
Total Assets
22.8B
Cash
679.6M
Profitability Ratios
Gross Margin
N/A
Operating Margin
-6.0%
Net Margin
23.2%
ROE
5.0%
ROA
0.7%
FCF Margin
1.3%
Balance Sheet & Liquidity
Current Ratio
1.45x
Quick Ratio
1.09x
Debt/Equity
4.43x
Debt/Assets
78.2%
Interest Coverage
N/A
Long-term Debt
14.8B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-08T12:13:51.893410 |
Data as of: 2026-03-31 |
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