Green energy solutions are experiencing rapid growth on the back of global efforts to reduce greenhouse gas emissions and limit the hazardous effects of climate change. In its efforts to achieve a carbon pollution-free electricity sector by 2035 and net-zero emissions economy-wide by 2050, the U.S. government is pushing the adoption of green energy.
According to a report by Report Ocean, the global renewable energy market was estimated at roughly $881.50 billion in 2020 and is expected to grow at an 8.2% CAGR between 2021 and 2027. However, high energy storage and infrastructure costs could hamper the green energy industry’s growth.
Sunrun Inc. (RUN), ChargePoint Holdings, Inc. (CHPT), and Sunnova Energy International Inc. (NOVA) are three green energy stocks that look overvalued at the current price level. So, we think it could be wise to avoid them now.
Sunrun Inc. (RUN)
RUN is a home solar, battery storage, and energy services company. The San Francisco-based company designs, develops, installs, sells, owns, and maintains residential solar energy systems in the U.S. In addition, it offers battery storage alongside solar energy systems to its customers.
RUN’s operating expenses for its fiscal third quarter, ended September 30, 2021, increased 112% year-over-year to $576.69 million, while its sales and marketing expenses increased 142.4% year-over-year to $171.46 million. The company’s net loss increased 182.5% year-over-year to $241.33 million. And its EPS came in at $0.11, down 60.7% year-over-year.
In terms of forward EV/S and P/S, RUN’s respective 10.12x and 4.64x are higher than the 2x and 1.58x industry averages. Analysts expect RUN’s EPS for the quarter ending March 31, 2022, to decrease 33.3% year-over-year to $0.16. The stock has declined 48.1% in price year-to-date to close yesterday’s trading session at $36.01.
RUN’s weak fundamentals are reflected in its POWR Ratings. The stock has an overall F rating, which equates to a Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
It has an F grade for Value, Stability, and Quality and a D grade for Sentiment. It is ranked #17 out of 19 stocks in the F-rated Solar industry. Click here to see the other ratings of RUN for Growth and Momentum.
ChargePoint Holdings, Inc. (CHPT)
CHPT in Campbell, Calif., develops and markets networked EV charging system infrastructure and cloud-based services. The company helps customers locate, reserve, authenticate and transact EV charging sessions. Also, it provides an open platform that is a part of its networked charging systems and subscriptions.
For its fiscal third quarter, ended October 31, 2021, CHPT’s non-GAAP operating expenses increased 61.3% year-over-year to $62.70 million. Its non-GAAP general and administrative expenses increased 28% year-over-year to $10.77 million. And its non-GAAP net loss increased 44.2% year-over-year to $47.02 million.
In terms of forward EV/S and P/S, CHPT’s respective 27.72x and 27.22x are higher than the 2x and 1.58x industry averages. Also, its 5.25x forward P/B is 82.3% higher than the 2.88x industry average. CHPT’s EPS for its fiscal 2022 and 2023 are expected to remain negative. Over the past year, the stock has declined 50.3% in price to close yesterday’s trading session at $19.89.
CHPT’s POWR Ratings reflect these bleak prospects. It has an overall F rating, equating to a Strong Sell. Also, it has an F grade for Value, Stability, and Sentiment and a D grade for Quality.
Sunnova Energy International Inc. (NOVA)
Houston, Tex.-based NOVA designs and installs solar energy and energy storage systems. The company also provides rooftop solar service within and outside the United States. Its services include operations and maintenance, monitoring, repairs and replacements, equipment upgrades, and onsite power optimization for the customer.
NOVA’s operating expenses for its fiscal third quarter, ended September 30, 2021, increased 58.8% year-over-year to $77.07 million, while its general and administrative expenses increased 87% year-over-year to $53.37 million. The company’s adjusted EBITDA decreased 0.6% year-over-year to $25.24 million.
In terms of forward EV/S and P/S, NOVA’s respective 27.67x and 13.44x are higher than the 4.52x and 2.42x industry averages. Also, its forward P/B and EV/EBITDA of 2.20x and 79.23x, respectively, are 9.5% and 554.4% higher than the 2.01x and 12.11x industry averages. Analysts expect NOVA’s EPS for its fiscal 2021 and 2022 to remain negative. The stock has declined 32.1% year-to-date to close yesterday’s trading session at $30.62.
NOVA’s weak prospects are reflected in its POWR Ratings. It has an overall F rating, which equates to a Strong Sell in our rating system.
It has an F grade for Value and Quality and a D grade for Stability and Sentiment. Within the Solar industry, it is ranked #16. Click here to see the other ratings of NOVA for Growth and Momentum.
RUN shares were trading at $35.60 per share on Thursday morning, down $0.41 (-1.14%). Year-to-date, RUN has declined -48.69%, versus a 27.21% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.3 Overvalued Green Energy Stocks to Avoid in December appeared first on StockNews.com