Sunrun
RUN
$11.44
-3.46%
Sunrun is the leading residential solar energy company in the United States, designing, installing, and maintaining solar systems for homeowners under long-term agreements. As the largest dedicated residential solar provider, it differentiates itself through a vertically integrated model that owns the systems and offers customers predictable energy costs. The current investor narrative centers on Sunrun's improving profitability trajectory, with Q1 2026 net income surging to $167.6 million from a loss a year earlier, while the stock has declined 39% year-to-date amid concerns over rising interest rates and policy uncertainty.…
RUN
Sunrun
$11.44
Investment Opinion: Should I buy RUN Today?
Rating: Buy. Sunrun's accelerating revenue growth, improving profitability, and deeply discounted valuation relative to peers and history support a bullish stance. The consensus analyst rating is Buy with an average target of $18.95, implying 60% upside.
Supporting Evidence: Revenue grew 43.2% YoY in Q1 2026, accelerating from prior quarters. Gross margin expanded to 30.4% from 19.6% a year ago. The company swung to net income of $167.6 million from a loss. Trailing P/E of 9.4x is a 57% discount to the solar industry average of 22x, and P/S of 1.45x is well below the industry average of 3.5x. The average analyst target implies 60% upside, and the high target implies 153% upside.
Risks & Conditions: The biggest risks are high leverage (debt-to-equity 4.75), negative free cash flow, and interest rate sensitivity. This Buy rating would be downgraded to Hold if free cash flow does not turn positive within the next two quarters or if interest rates rise significantly. It would be upgraded if the company achieves positive free cash flow and reduces leverage. Overall, Sunrun appears undervalued relative to its growth trajectory and industry peers, but the high leverage and policy risks warrant caution.
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RUN 12-Month Price Forecast
Sunrun's fundamentals are improving rapidly, with revenue growth accelerating and margins expanding. The stock's valuation is deeply discounted relative to peers and history, suggesting the market is overly pessimistic. However, high leverage and negative free cash flow introduce significant risk. The base case of 50% probability assumes continued growth and profitability, driving the stock toward the analyst average target. If the company can achieve positive free cash flow, the bull case becomes more likely. Conversely, any reversal in profitability or adverse policy changes could trigger the bear case. Overall, the risk/reward is favorable for investors with a higher risk tolerance.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Sunrun's 12-month outlook, with a consensus price target around $18.95 and implied upside of +65.6% versus the current price.
Average Target
$18.95
0 analysts
Implied Upside
+65.6%
vs. current price
Analyst Count
—
covering this stock
Price Range
$13 - $30
Analyst target range
Sunrun is covered by 19 analysts, with a consensus recommendation of 'Buy' (mean rating 2.05 on a 1-5 scale, where 1 is Strong Buy). The average price target of $18.95 implies 60% upside from the current price of $11.85, reflecting strong bullish sentiment despite recent price weakness. The distribution shows 5 Strong Buy, 8 Buy, 4 Hold, 1 Sell, and 1 Strong Sell, indicating a generally positive outlook but with notable dissent. The target range spans from a low of $13.00 to a high of $30.00, representing 10% to 153% upside. The wide spread (high-to-low difference of $17) signals high uncertainty, with the low target likely pricing in sustained high interest rates and policy headwinds, while the high target assumes a favorable regulatory environment and margin expansion. Recent ratings actions show consistency: Susquehanna maintained Positive, UBS and Citigroup reiterated Buy, while GLJ Research has repeatedly affirmed Sell. The lack of recent downgrades suggests analysts are not turning bearish despite the stock's decline, which could indicate they view the pullback as an opportunity rather than a deterioration.
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Bulls vs Bears: RUN Investment Factors
Sunrun presents a compelling turnaround story with accelerating revenue growth, expanding margins, and a swing to net income profitability. The stock trades at a deep discount to peers and its own history, with analysts seeing 60% upside. However, high leverage, negative free cash flow, and sensitivity to interest rates and policy create significant risks. The bull case hinges on sustaining profitability and benefiting from a favorable rate environment, while the bear case focuses on financial fragility and policy headwinds. The single most important tension is whether Sunrun can generate sustainable positive free cash flow and reduce leverage, which would validate the business model and support a re-rating.
Bullish
- Profitability Turnaround Achieved: Sunrun swung to a net income of $167.6 million in Q1 2026 from a $277.2 million loss in Q1 2025, demonstrating a dramatic profitability improvement. Gross margin expanded to 30.4% from 19.6% a year ago, driven by operational efficiencies and a shift to higher-margin service revenue.
- Revenue Growth Accelerating: Q1 2026 revenue grew 43.2% year-over-year to $722.2 million, accelerating from 35.4% in Q4 2025 and 27.5% in Q3 2025. The mix is shifting toward recurring subscription-like service revenue, which supports margin expansion and earnings visibility.
- Analyst Consensus Strong Buy: 19 analysts rate Sunrun a Buy (mean 2.05 on 1-5 scale) with an average price target of $18.95, implying 60% upside from the current $11.85. The high target of $30.00 suggests 153% potential upside if conditions align.
- Valuation at Historical Discount: Trailing P/E of 9.4x is a 57% discount to the solar industry average of 22x, and near the low end of its historical range (1.7x to 91.7x). P/S of 1.45x is also well below the industry average of 3.5x, suggesting the market is pricing in significant pessimism.
Bearish
- High Leverage and Negative Free Cash Flow: Debt-to-equity ratio of 4.75 reflects the capital-intensive solar financing model, and free cash flow was negative $414.2 million in Q1 2026, though improved from -$759.2 million a year ago. The company requires continued access to capital markets to fund operations.
- Interest Rate Sensitivity: With a beta of 2.323, Sunrun is highly sensitive to interest rate changes. Rising rates increase financing costs for solar systems and compress valuations for growth stocks. The stock has declined 39% year-to-date, partly due to rate headwinds.
- Policy and Regulatory Uncertainty: Sunrun's business depends on net metering policies, tax credits, and solar incentives. Any adverse policy changes could reduce customer demand and impact the value of existing contracts. The forward P/E of 13.9x implies the market expects earnings to normalize lower.
- Operating Losses Persist: Despite net income profitability, operating margin was still negative at -6.0% in Q1 2026, though improved from -22.8% a year ago. Core operations remain unprofitable, and the positive net income was aided by non-operating items.
RUN Technical Analysis
Sunrun's 1-year price change of +19.0% masks a sharp reversal from its 52-week high of $22.44, as the stock now trades at $11.85, just 53% of its 52-week range. This positioning near the lower end of the range suggests bearish momentum and potential value trap dynamics, as the stock has failed to hold above the midpoint despite the positive annual return. The 52-week low of $9.01 provides a critical floor, while the high represents formidable resistance. Over the past 3 months, RUN has declined 4.4%, underperforming the S&P 500's 4.7% gain by 9.1 percentage points, indicating persistent relative weakness. The 1-month change of -4.7% versus the S&P 500's +0.3% shows accelerating downside momentum, diverging from the positive 1-year trend. This divergence suggests the longer-term uptrend is under threat, with short-term selling pressure overwhelming any residual bullish sentiment. The stock's beta of 2.323 implies it is 132% more volatile than the market, amplifying both upside and downside moves. Support lies near the 52-week low of $9.01, a break below which would signal a potential new downtrend. Resistance at $22.44 (52-week high) represents a 89% upside from current levels, but the stock's inability to sustain rallies above $14 in recent months highlights weak buying conviction. The elevated short ratio of 5.72 days to cover suggests significant bearish positioning, which could fuel a short squeeze but also reflects deep skepticism.
Beta
2.32
2.32x market volatility
Max Drawdown
-47.1%
Largest decline past year
52-Week Range
$9-$22
Price range past year
Annual Return
+11.7%
Cumulative gain past year
| Period | RUN Return | S&P 500 |
|---|---|---|
| 1m | -15.4% | -0.6% |
| 3m | -2.9% | +5.4% |
| 6m | -35.8% | +8.3% |
| 1y | +11.7% | +18.3% |
| ytd | -41.2% | +8.8% |
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RUN Fundamental Analysis
Sunrun's revenue trajectory has been robust, with Q1 2026 revenue of $722.2 million growing 43.2% year-over-year, accelerating from 35.4% growth in Q4 2025 and 27.5% in Q3 2025. The revenue mix is shifting toward higher-margin service revenue, with Customer Agreements and Service segments totaling $447.1 million and $467.8 million, respectively, while product revenue (Energy Systems and Manufactured Product) contributed $254.4 million. This mix shift supports margin expansion as recurring subscription-like revenue grows. The company swung to a net income of $167.6 million in Q1 2026 from a net loss of $277.2 million in Q1 2025, demonstrating a dramatic profitability turnaround. Gross margin improved to 30.4% from 19.6% a year ago, driven by operational efficiencies and higher-margin service revenue. However, operating margin remained negative at -6.0%, though it improved from -22.8% in Q1 2025, indicating that while core operations are still unprofitable, the trend is narrowing losses. Sunrun's balance sheet shows a debt-to-equity ratio of 4.75, indicating high leverage typical of capital-intensive solar financing models. Free cash flow was negative $414.2 million in Q1 2026, though this improved from negative $759.2 million in Q1 2025. The company had $1.09 billion in cash at the end of Q1 2026, providing liquidity, but the negative free cash flow and high debt levels require continued access to capital markets. ROE of 14.4% is strong, but this is inflated by high leverage; ROA of -0.16% reflects ongoing asset inefficiency.
Quarterly Revenue
$722231000.0B
2026-03
Revenue YoY Growth
+43.2%
YoY Comparison
Gross Margin
30.4%
Latest Quarter
Free Cash Flow
$-750573000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is RUN Overvalued?
Given Sunrun's positive net income of $167.6 million in Q1 2026, we lead with the P/E ratio. The trailing P/E of 9.4x is low, but the forward P/E of 13.9x implies the market expects earnings to normalize lower, reflecting the volatile nature of solar incentives and interest rate sensitivity. The gap between trailing and forward P/E suggests skepticism about earnings sustainability. Compared to the industry average P/E of 22x (Solar industry), Sunrun's trailing P/E of 9.4x represents a 57% discount, which may appear cheap but reflects the company's high leverage, negative free cash flow, and policy-dependent business model. The P/S ratio of 1.45x is well below the industry average of 3.5x, further indicating a discounted valuation. Historically, Sunrun's trailing P/E has ranged from 1.7x (Q2 2025) to 91.7x (Q3 2021), with the current 9.4x near the lower end of its historical band. This suggests the market is pricing in significant pessimism, potentially overcorrecting for near-term headwinds. The PEG ratio of -0.08 (negative due to negative earnings growth in some periods) is not meaningful, but the low P/E relative to history could imply a value opportunity if the company sustains profitability.
PE
9.4x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 2x~20x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
8.7x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: Sunrun's high debt-to-equity ratio of 4.75 and negative free cash flow of -$414.2 million in Q1 2026 indicate significant financial leverage and reliance on external financing. The company's operating margin remains negative at -6.0%, meaning core operations are still unprofitable despite net income gains. Any disruption in capital markets could impair its ability to fund growth and service debt. Additionally, the forward P/E of 13.9x suggests the market expects earnings to decline from the trailing 9.4x level, reflecting skepticism about earnings sustainability.
Market & Competitive Risks: With a beta of 2.323, Sunrun is highly correlated to market volatility and interest rate movements. Rising rates increase the cost of financing solar installations and compress valuation multiples for growth stocks. The stock has already declined 39% year-to-date, underperforming the S&P 500 by 48 percentage points. Competitive pressures from other solar providers and traditional utilities could erode market share. Policy risks include potential changes to net metering, investment tax credits, and state-level solar incentives, which could reduce customer demand.
Worst-Case Scenario: In a scenario where interest rates remain elevated, policy support erodes, and the company fails to achieve positive free cash flow, Sunrun could face a liquidity crunch. The 52-week low of $9.01 represents a 24% downside from the current price of $11.85. If the company needs to raise capital at distressed levels, the stock could fall to the analyst low target of $13.00, which is still above the current price, but a break below $9.01 could trigger further declines. Historical max drawdown of -47% suggests a potential loss of up to 47% from current levels in a severe downturn.
FAQ
The primary risks are financial, competitive, and regulatory. Financially, Sunrun's debt-to-equity ratio of 4.75 and negative free cash flow of -$414.2 million in Q1 2026 indicate high leverage and reliance on external capital. Competitively, the solar industry is fragmented and subject to pricing pressure. Regulatory risks include changes to net metering policies, investment tax credits, and tariffs on solar panels, which could reduce customer demand. Additionally, the stock's beta of 2.323 makes it highly sensitive to interest rate changes and market volatility. The most severe risk is a liquidity crisis if the company cannot access capital markets, potentially leading to equity dilution or bankruptcy.
Analysts have a consensus Buy rating with an average price target of $18.95, implying 60% upside from the current $11.85. The target range spans from $13.00 (low) to $30.00 (high). Our base case (50% probability) sees the stock trading between $13.00 and $18.95 over the next 12 months, driven by continued revenue growth and profitability. The bull case (25% probability) targets $18.95 to $30.00, assuming favorable interest rates and policy support. The bear case (25% probability) sees the stock falling to $9.01 to $13.00 if profitability reverses or policy headwinds intensify. The most likely scenario is the base case, where Sunrun sustains its turnaround but faces headwinds from elevated interest rates.
Based on the trailing P/E of 9.4x, Sunrun appears undervalued relative to the solar industry average of 22x and its own historical range of 1.7x to 91.7x. The P/S ratio of 1.45x is also well below the industry average of 3.5x. However, the forward P/E of 13.9x implies the market expects earnings to normalize lower, reflecting skepticism about the sustainability of recent profitability. The low valuation suggests the market is pricing in significant risks, including high leverage, negative free cash flow, and policy uncertainty. If Sunrun can sustain its profitability trajectory, the stock is likely undervalued. If earnings revert to losses, the current valuation could be justified.
Sunrun presents a compelling risk/reward for investors with a higher risk tolerance. The stock trades at a trailing P/E of 9.4x, a 57% discount to the solar industry average of 22x, and analysts see 60% upside to the average target of $18.95. However, the company has high leverage (debt-to-equity 4.75) and negative free cash flow, making it sensitive to interest rates and policy changes. For long-term investors who believe in the solar adoption trend and Sunrun's ability to generate sustainable free cash flow, the current valuation offers a potential entry point. Short-term traders should be cautious given the stock's high beta of 2.323 and recent 39% year-to-date decline. It is not suitable for conservative or income-focused investors.
Sunrun is better suited for long-term investment due to its high volatility (beta 2.323) and the time needed for its business model to generate sustainable free cash flow. The company is in a growth phase with accelerating revenue and improving margins, but it remains capital-intensive and policy-dependent. Short-term traders may find opportunities around earnings announcements or policy events, but the stock's 39% year-to-date decline and 5.72 days to cover short ratio indicate significant downside risk. A minimum holding period of 3-5 years is recommended to allow the company to reduce leverage and achieve positive free cash flow. The stock does not pay a dividend, so it is not suitable for income investors.
