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We feel now is a pretty good time to analyse Sunnova Energy International Inc.'s (NYSE:NOVA) business as it appears the company may be on the cusp of a considerable accomplishment. Sunnova Energy International Inc., together with its subsidiaries, provides residential solar and energy storage services in the United States. With the latest financial year loss of US$252m and a trailing-twelve-month loss of US$214m, the US$4.0b market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which Sunnova Energy International will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
According to the 11 industry analysts covering Sunnova Energy International, the consensus is that breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of US$67m in 2023. Therefore, the company is expected to breakeven roughly 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 60% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of Sunnova Energy International's upcoming projects, however, keep in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we would like to bring into light with Sunnova Energy International is its debt-to-equity ratio of 155%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.
There are key fundamentals of Sunnova Energy International which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Sunnova Energy International, take a look at Sunnova Energy International's company page on Simply Wall St. We've also compiled a list of key factors you should further examine:
Valuation: What is Sunnova Energy International worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Sunnova Energy International is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Sunnova Energy International’s board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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