Sunnova Energy International (NOVA) is a residential solar energy solutions company serving customers in the U.S. In April 2021, it acquired solar platform SunStreet in a deal that also made it Lennar’s (LEN) exclusive residential solar solutions provider.
Let’s take a look at Sunnova’s latest financial performance, corporate developments, and newly added risk factors. (See Sunnova Energy International stock charts on TipRanks).
Q2 Financial Results
Sunnova reported revenue of $66.6 million for Q2 2021, compared to $42.8 million in the same quarter last year, and beat the consensus estimate of $57.17 million. Revenue growth was partly attributed to the SunStreet acquisition, which brought an additional 33,500 customers. Notably, Sunnova gained 12,700 customers organically in Q2 and ended the quarter with a total of 162,600 customers.
The company posted a loss per share of $0.57, compared to the loss of $0.30 in the same quarter last year. The consensus estimate called for a loss per share of $0.17. It said that the loss widened due to the increase in interest expense. Sunnova ended Q2 with $469.1 million in cash.
Corporate Developments
Sunnova announced on September 27 that it has partnered with AutoGrid on a program to modernize California’s power grid.
Markedly, Sunnova has tapped the green bond market to raise about $400 million to finance existing and new green projects. The notes priced by the company will bear interest semi-annually and mature in September 2026.
Risk Factors
The new TipRanks Risk Factors tool shows 90 risk factors for Sunnova. Since Q4 2020, the company has updated its risk profile with two new risk factors under the Finance and Corporate category.
Sunnova tells investors that it has entered into various capped call transactions with some financial institutions in connection with the convertible notes it has issued. It says that the instruments are designed to minimize dilution of its stock or offset cash payments it may be required to make in connection with convertible notes. However, it cautions that the capped call transactions could adversely affect its stock price.
Sunnova also cautions investors that if any of the financial institutions in the capped call transactions default on their obligations, its stock may suffer greater dilution than currently anticipated. Furthermore, it warns that if any of the financial institutions in the arrangement become bankrupt, it could end up as an unsecured creditor.
The majority of Sunnova’s risk factors fall under the Finance and Corporate category, with 39% of the total risks. That is in line with the sector average. Sunnova’s stock price has declined about 29% year-to-date.
Analysts’ Take
In August, Wolfe Research analyst Steve Fleishman initiated coverage on Sunnova stock with a Buy rating and a price target of $50. The analyst’s price target suggests 56.74% upside potential.
Fleishman is bullish on the outlook of the residential solar industry. The analyst observed that Sunnova has become a leader in the U.S. residential solar finance market.
Consensus among analysts is a Strong Buy based on 7 Buys and 2 Holds. The average Sunnova Energy International price target of $53.11 implies 66.49% upside potential to current levels.
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