Analyzing SolarCity (SCTY) and Sunrun (RUN)

SolarCity (NASDAQ: SCTY) and Sunrun (NASDAQ:RUN) are both energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, earnings, institutional ownership, valuation, profitability and risk.

Insider & Institutional Ownership

40.0% of SolarCity shares are held by institutional investors. Comparatively, 78.1% of Sunrun shares are held by institutional investors. 36.4% of SolarCity shares are held by company insiders. Comparatively, 24.1% of Sunrun shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations for SolarCity and Sunrun, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SolarCity 0 0 0 0 N/A
Sunrun 0 0 4 0 3.00

Sunrun has a consensus price target of $9.00, suggesting a potential upside of 53.58%. Given Sunrun’s higher possible upside, analysts clearly believe Sunrun is more favorable than SolarCity.

Valuation and Earnings

This table compares SolarCity and Sunrun’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SolarCity N/A N/A N/A ($0.31) -65.71
Sunrun $453.90 million 1.38 $91.68 million $0.87 6.74

Sunrun has higher revenue and earnings than SolarCity. SolarCity is trading at a lower price-to-earnings ratio than Sunrun, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares SolarCity and Sunrun’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SolarCity -112.36% 22.92% -10.69%
Sunrun 18.79% 9.25% 2.69%

Summary

Sunrun beats SolarCity on 7 of the 9 factors compared between the two stocks.

SolarCity Company Profile

SolarCity Corporation is a United States-based solar provider. The Company is primarily engaged in the design, manufacture, installation and sale or lease of solar energy systems to residential and commercial customers, or sale of electricity generated by solar energy systems to customers. It operates through solar energy products and services segment. It integrates the sales, engineering, manufacturing, installation, monitoring, maintenance and financing of its distributed solar energy systems. It offers its customers the option to either purchase and own solar energy systems or to purchase the energy that its solar energy systems produce through various contractual arrangements. It installs solar energy system at its customer’s premises and charge the customer a monthly fee for the power that its system produces. Its products, services and technologies include solar energy systems, customer agreements, grid control/energy storage systems, Zep Solar mounting systems and software.

Sunrun Company Profile

Sunrun Inc. is engaged in the design, development, installation, sale, ownership and maintenance of residential solar energy systems (Projects) in the United States. The Company is engaged in providing solar energy services and products to its customers. As of December 31, 2016, it operated a fleet of residential solar energy systems in the United States, with approximately 134,000 customers across 16 states, as well as the District of Columbia. The Company sells to homeowners over the phone, in the field through canvassing and in-home sales and through retail sales channels through its strategic partners. The solar service offerings are provided through its lease and power purchase agreements. It sells solar service offerings and installs solar energy systems for homeowners through its direct-to-consumer channel. It sells solar energy systems to homeowners, as well as related products, such as solar panels, inverters, racking systems and other solar-related equipment to resellers.

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