Sunnova Energy International Inc.'s (NYSE:NOVA): Sunnova Energy International Inc. provides residential solar and energy storage services in the United States. The US$1.5b market-cap posted a loss in its most recent financial year of -US$169.1m and a latest trailing-twelve-month loss of -US$189.4m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on NOVA’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for NOVA, its year of breakeven and its implied growth rate.
According to the 8 industry analysts covering NOVA, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$350m in 2023. So, NOVA is predicted to breakeven approximately 3 years from today. What rate will NOVA have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 59%, which signals high confidence from analysts. If this rate turns out to be too aggressive, NOVA may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of NOVA’s upcoming projects, though, bear in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing I would like to bring into light with NOVA is its debt-to-equity ratio of 197%. Typically, debt shouldn’t exceed 40% of your equity, and NOVA has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
There are too many aspects of NOVA to cover in one brief article, but the key fundamentals for the company can all be found in one place – NOVA’s company page on Simply Wall St. I’ve also put together a list of pertinent aspects you should look at:
Valuation: What is NOVA 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 NOVA 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 back ground.
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.
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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. Thank you for reading.