Although the transition to clean energy is anticipated to keep the green energy sector afloat, solar energy, which witnessed significant headwinds in 2022, could face further challenges amid declining installations and soaring supply chain stress.
Given this backdrop, fundamentally weak green solar energy stocks Sunrun Inc. (RUN), Polar Power, Inc. (POLA), and Ascent Solar Technologies, Inc. (ASTI) could be best avoided now for reasons mentioned in the article.
To meet the net-zero emission goals, investment in alternative energy has been on the rise, and the importance of the solar industry has also been growing. However, like other industries last year, the solar energy industry was not out of the grasp of the plethora of headwinds.
According to the U.S. Solar Market Insight 2022 Year in Review by the Solar Energy Industries Association (SEIA) and Wood Mackenzie, utility-scale installations fell by 31% year-over-year to 11.8 GW, posting the sector’s lowest total since before the COVID-19 pandemic.
Moreover, amid momentum escalating to impose steep tariffs on Chinese components have alarmed the U.S. solar industry, homeowners hoping to add solar panels to their roofs, motorists wanting to charge electric vehicles with clean power, and utilities trying to reduce their carbon footprints.
Furthermore, according to Michelle Davis, lead distributed solar analyst at Wood Mackenzie, the solar industry faces a significant amount of uncertainty in the year ahead, more than the usual uncertainty about the future.
Much of whether the industry rebounds in the latter half of 2023 depends on what happens to supply chain disruptions created by the Uyghur Act.
Against this backdrop, it would be wise to avoid green stocks RUN, POLA, and ASTI, with bleak prospects now.
Sunrun Inc. (RUN)
RUN engages in the design, installation, sale, ownership, and maintenance of residential solar energy systems in the United States. The company also sells solar energy systems and products, such as panels and racking, and solar leads generated to customers.
The stock’s trailing-12-month gross profit margin of 11.90% is 60.4% lower than the 30.01% industry average. Also, its trailing-12-month ROE and ROTA of 0.33% and 0.11% are 97.6% and 97.9% lower than the industry averages of 13.67% and 5.07%, respectively.
For the fiscal first quarter that ended March 31, 2023, RUN’s total operating expenses increased 20.7% year-over-year to $817.54 million. Its loss from operations increased 25.5% year-over-year to $227.69 million.
The company’s net loss increased 114.6% from its year-ago value to $335.77 million. Its loss per share decreased 166.7% year-over-year to $1.12 for the same quarter.
Analysts expect RUN’s EPS to come in at negative $0.29 for the fiscal second quarter ending June 2023, down 375.7% year-over-year. Its revenue is expected to come in at $618.76 million for the same year.
The stock has declined 24.6% over the past year and 32.2% over the past three months to close its last trading session at $17.65.
RUN’s POWR Ratings reflect its poor prospects. It has an overall grade of F, which equates to a Strong Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
RUN has an F grade for Quality and a D for Stability and Sentiment. It is ranked #22 of 24 stocks in the F-rated Solar industry.
Beyond what we’ve stated above, we have also given RUN a grade for Growth, Value, and Momentum. Get all RUN ratings here.
Polar Power, Inc. (POLA)
POLA designs, manufactures, and sells Direct Current (DC) power generators, renewable energy, and cooling systems in the United States and internationally. The company offers DC base power systems, DC hybrid power systems, DC solar hybrid power systems, and mobile power systems.
Its trailing-12-month asset turnover ratio of 0.63x is 21.8% lower than the 0.80x industry average. Its trailing-12-month gross profit margin of 13.23% is 55.9% lower than the 30.01% industry average.
POLA’s net sales decreased 5% year-over-year to $16.06 million during the fiscal year that ended December 31, 2022. Its gross profit declined 38.3% year-over-year to $2.13 million, while its net loss came in at $5.58 million, up 294.9% year-over-year.
Also, its net loss per share came in at $0.43, up 290.9% from the previous-year quarter.
The stock has declined 50.7% over the past year to close its last trading session at $1.05.
POLA’s POWR Ratings reflect this bleak outlook. The stock has an overall D rating, equating to Sell in our proprietary rating system.
POLA is also graded an F in Growth and a D in Quality and Stability. It is ranked #18 same industry.
In addition to the POWR Ratings stated above, POLA’s ratings for Value, Sentiment, and Momentum can be seen here.
Ascent Solar Technologies, Inc. (ASTI)
ASTI designs, manufactures, and sells copper-indium-gallium-diselenide photovoltaic products for agrivoltaics, aerospace, satellites, near-earth orbiting vehicles, and fixed-wing unmanned aerial vehicle applications.
Its trailing-12-month asset turnover ratio of 0.08x is 87.4% lower than the 0.62x industry average. Also, its trailing-12-month ROTC and ROTA of negative 85.83% and 105.77% compare to the industry averages of 2.08% and 0.64%, respectively.
During the fiscal year that ended December 31, 2022, ASTI’s total cost and expenses increased 94.5% year-over-year to $18.28 million. The company’s net loss increased 229.2% year-over-year to $19.75 million. For the same period, ASTI’s net loss per share came in at $0.66.
Moreover, its net cash used in operating activities stood at $10.51 million as of December 31, 2022, compared to $9.40 million as of December 31, 2021.
The stock has lost 97.4% over the past year and 91.8% over the past six months to close the last trading session at $0.23.
ASTI’s weak fundamentals are reflected in its POWR Ratings. The stock has an overall D rating, which equates to Sell in our proprietary rating system.
It has a D grade for Value, Stability, and Quality. ASTI is ranked #20 in the same industry.
To see the additional POWR Ratings of ASTI (Growth, Sentiment, and Momentum), click here.
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RUN shares were trading at $17.58 per share on Monday morning, down $0.07 (-0.40%). Year-to-date, RUN has declined -26.81%, versus a 8.35% rise in the benchmark S&P 500 index during the same period.
About the Author: Sristi Suman Jayaswal
The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.
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