Value-focused investors are always searching for stocks that are priced below their intrinsic value. One such stock that deserves attention is Sunrun Inc (NASDAQ:RUN). While the stock may seem undervalued, there are certain risk factors that cannot be ignored. Understanding these risks is crucial to making an informed investment decision.
The stock is currently priced at $14.38, with a daily loss of 4.52% and a 3-month decrease of 25.67%. However, its fair valuation is indicated at $43.6, according to its GF Value. The GF Value represents the current intrinsic value of a stock and is calculated based on historical multiples, GuruFocus adjustment factors, and future performance estimates of the business.
One important risk indicator is Sunrun’s low Altman Z-score of 0.22. The Altman Z-score predicts the probability of a company entering bankruptcy within a two-year time frame. A score below 1.8 suggests a high likelihood of financial distress. While Sunrun may appear undervalued, its low Altman Z-score raises concerns about its financial health.
Sunrun is engaged in the design, development, installation, sale, ownership, and maintenance of residential solar energy systems in the United States. The company acquires customers directly and through strategic partners. Sunrun’s customers typically enter into long-term agreements to utilize its solar energy systems.
In conclusion, Sunrun’s seemingly undervalued stock may be enticing, but the low Altman Z-score and other risk factors suggest that it could be a potential value trap. Thorough due diligence and careful consideration of all risks are necessary before making any investment decisions.
– GuruFocus [source without URL]