FIN 320 - Final Project Part 2 PDF

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Assessment of Sunrun, Inc....

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Southern New Hampshire University

FINAL PROJECT Part 2

Brodie Kio

Running head: FINAL PROJECT PART 2

I.

Workbook Preparation

The workbook was prepared using the last three years of financial statements. The company of primary analysis is Sunrun, Inc. The competitor company is First Solar, Inc. II.

Three-Year Returns

The three-year return on the stock price of Sunrun is a whopping 425% (‘Sunrun Stock History’ tab, D8). Sunrun has been able to consistently provide their shareholders with a compounding stock value over the long-term. The three-year return on First Solar’s stock price has not faired as well. Their three-year return is, in contrast, a mere 65% (‘First Solar Stock History’ tab, C8). First Solar has seen steady ups and downs over the years and is currently experiencing a higher than normal stock price in relation to their previous years.

III.

Financial Calculations

Calculations for current ratios, price-to-earning, debt-to-equity ratios, return-onequity ratios, earnings per share, profit margins and free cash flows are located on tab ‘Sunrun 17-19 Balance State.’ and First Solar’s is located on tab ‘First Solar 17-19 Balance State.’. (For formulas consisting of input from multiple tabs, calculations were done with either a calculator or calculated on a separate tab and written into their respective cells).

IV. Industry Averages Industry averages for Renewable Energies (Mergent, 2020) are located on tabs ‘Sunrun 17-19 Balance State.’ and ‘First Solar 17-19 Balance State.’. In contrast, these two companies are above average in terms of liquidity. Sunrun has a lower current ratio than First Solar and this is most likely because Sunrun has recently acquired Vivint Solar and would have used retained earnings to do so. Debt-to-equity tells a similar story. While the industry average is .02, Sunrun’s ratio is around 4.5 because of their recent acquisitions and price-to-earnings ratios suggest the same. While price per earnings have been predominantly negative for both companies, the steady rise of Sunrun’s stock value shows a clear and defined plan at work. When companies expand, share holders understand that today’s cost will be tomorrows profit. Its this long-term thinking that has brought Sunrun to the top of the industry.

V.

Performance Over Time

Sunrun’s long-term financial strength lies in their return to investors. While Sunrun’s stock price is currently only valued at about half of that of First Solar, Sunrun has shown the

Running head: FINAL PROJECT PART 2 ability to consistently increase the value for their investors. A weakness of Sunrun over the last three years is their profit margin. They have been operating around a 40% loss the last few years. This seems mostly due to recent acquisitions. First Solar’s free cash flow is one of their greatest strengths. The last three years they have had a positive cash flow that has grown over the last three years, which can be distributed among its’ investors. Their weakness seems to be in their rate of return over the last three years.

VI.

Investment

Sunrun is considered a growth company because of their high rate of return. This provides investors with confidence that their investment will be fully realized through stock valuation. I believe Sunrun is currently undervalued because of the financial outlay involved in their recent acquisition and therefore a value company as well. First Solar may not be considered a growth company since their stock value has proven to be marginal at best. There could, however, be grounds to label this company as a value company since their free cash flows show the opportunity for dividends at the close of every year.

Running head: FINAL PROJECT PART 2 References:

Mergent Online. (2020). Sunrun, Inc. Balance Sheet. Retrieved July 18, 2020 from: https://wwwmergentonline-com.ezproxy.snhu.edu/companyfinancials.php? pagetype=asreported&compnumber=140412&period=Annuals&dataarea=BS&range=3¤c y=AsRep&scale=AsRep&Submit=Refresh

Mergent Online. (2020). Sunrun, Inc. Income Statement. Retrieved July 18, 2020 from: https://www-mergentonline-com.ezproxy.snhu.edu/companyfinancials.php? pagetype=asreported&compnumber=140412&period=Annuals&dataarea=PL&range=3¤c y=AsRep&scale=AsRep&Submit=Refresh

Mergent Online. (2020). Sunrun, Inc. Cash Flows. Retrieved July 18, 2020 from: https://wwwmergentonline-com.ezproxy.snhu.edu/companyfinancials.php? pagetype=asreported&compnumber=140412&period=Annuals&dataarea=CF&range=3¤c y=AsRep&scale=AsRep&Submit=Refresh Mergent Online. (2020). Sunrun, Inc. Stock History. Retrieved July 18, 2020 from: https://www-mergentonline-com.ezproxy.snhu.edu/equitypricing.php?compnumber=140412 Mergent Online. (2020). First Solar, Inc. Balance Sheet. Retrieved Aug 18, 2020 from: https://www-mergentonline-com.ezproxy.snhu.edu/companyfinancials.php? pagetype=asreported&compnumber=116048&period=Annuals&dataarea=BS&range=3¤c y=AsRep&scale=AsRep&Submit=Refresh Mergent Online. (2020). First Solar, Inc. Income Statement. Retrieved Aug 18, 2020 from: https://www-mergentonline-com.ezproxy.snhu.edu/companyfinancials.php? pagetype=asreported&compnumber=116048&period=Annuals&dataarea=PL&range=3¤cy=AsRep &scale=AsRep&Submit=Refresh

Mergent Online. (2020). First Solar, Inc. Cash Flows. Retrieved Aug 18, 2020 from: https://www-mergentonline-com.ezproxy.snhu.edu/companyfinancials.php? pagetype=asreported&compnumber=116048&period=Annuals&dataarea=CF&range=3¤c y=AsRep&scale=AsRep&Submit=Refresh Mergent Online. (2020). First Solar, Inc. Stock History. Retrieved Aug 18, 2020 from: https://www-mergentonline-com.ezproxy.snhu.edu/equitypricing.php? pagetype=report&compnumber=116048...