Sunnova Energy International

Sunnova Energy International Inc. (NYSE: NOVA) is a company that provides residential solar and energy storage solutions to customers throughout the United States. The company operates using a residential solar dealership model, collaborating with local dealers who take care of the initial steps such as system design and installation on behalf of Sunnova's customers. Sunnova also offers a range of services, including operations and maintenance, continuous monitoring, repair and replacement services, equipment upgrades, and on-site power optimization for its customers.

Recent Financial and Business Updates:

• Anticipated Financial Disclosure by Sunnova Energy International Inc.: Unveiling Q4 and FY 2023 Results: Sunnova Energy International Inc. is set to release its financial results for the fourth quarter and full year of 2023, with the announcement scheduled post-market closure on February 21, 2024. A comprehensive conference call is slated for February 22, 2024, at 8:00 a.m. Eastern Time, providing a platform to elucidate and discuss the reported results.
• Q3 2023 Revenue Surge: Robust Growth and Contributing Factors: Sunnova demonstrated robust financial performance in Q3 2023, reporting a noteworthy revenue increase to USD 198.4 million, marking a substantial USD 49.0 million surge compared to the corresponding period in 2022. This remarkable expansion was driven by increased deployment of solar energy systems, augmented inventory sales, and a deliberate focus on elevating service revenue through enhanced offerings to existing clientele.
• Nine-Month Revenue Momentum: Substantial Increase and Driving Forces: Over the nine months ending on September 30, 2023, Sunnova experienced a substantial revenue surge, reaching USD 526.5 million—a significant USD 164.4 million increase compared to the same period in 2022. This pronounced growth can be attributed to an intensified presence of solar energy systems, a strategic emphasis on supplementary services to existing clients, and heightened revenue from inventory sales.
• Operating Expenses and Adjustments in Q3 2023: Key Influencers: In Q3 2023, Sunnova witnessed a rise in total operating expenses to USD 236.6 million, indicating a USD 59.5 million increase from the same period in 2022. This escalation was primarily influenced by expanded solar energy system deployment, elevated general and administrative costs, increased expenses related to inventory sales, and augmented service provisions.
• Nine-Month Operating Expense Trends: Substantial Increase and Contributors: Over the nine months ending on September 30, 2023, total operating expenses reached USD 673.2 million, showcasing a substantial increase of USD 246.5 million from the comparable period in 2022. This surge was primarily attributed to the amplified installation of solar energy systems, heightened general and administrative costs, increased expenses linked to inventory sales, and additional services.
• Earnings and Adjusted EBITDA in Q3 2023: Analysing Financial Performance: In Q3 2023, Sunnova reported a net loss of USD 56.5 million, surpassing the USD 32.3 million loss in the corresponding 2022 period. This heightened loss was primarily attributed to increased interest expenses and elevated general and administrative expenses, partially offset by increased interest income and tax benefits.
• Financial Movements and Guidance: Stability Amidst Spending: Adjusted EBITDA remained relatively stable at USD 40.4 million for the quarter ending September 30, 2023. However, for the nine months ending at the same date, it declined to USD 83.0 million from USD 93.5 million in 2022 due to increased spending from unexpected growth. Noteworthy increases in proceeds from customer notes and investments in solar receivables were observed due to an expanded customer loan portfolio, resulting in escalated interest income.
• Financial Position and Future Projections: Strong Reserves and Forward-Looking Guidance: As of September 30, 2023, Sunnova boasted total cash reserves of USD 725.1 million. The management reaffirmed full-year 2023 guidance for various aspects, including customer additions, Adjusted EBITDA, interest income from customer notes, and proceeds from investments in solar receivables. Additionally, the company introduced its 2024 guidance, projecting aggressive growth in customer additions, EBITDA, and other financial aspects. 

Technical Observation (on the daily chart)

The Relative Strength Index (RSI) over a 14-day period stands at 32.72, downward trending and moving towards oversold zone, with the expectations of an upside momentum or some consolidation near 52-week low levels. Additionally, the stock's current positioning is below both 21-period SMA and 50-period SMA, which may serve as a dynamic short-term resistance level.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The yellow colour line reflects the 21-period simple moving average (SMA) while the blue line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The orange colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The red and green colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps with easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is February 05, 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: The report publishing date is as per the Pacific Time Zone.