Sunedison Inc (NYSE: SUNE)
Sunedison is an incredible company, and if you follow my writing here or elsewhere, you know that they are one of my favorite stocks on the market. However, recently, we’ve seen declines on the stock. In fact, after a major competitor in the space released its earnings report, SUNE started to fall in a big way. That, combined with other investor fears, has been dragging the stock downward. Today, we’ll talk about all of the fears that are bringing SUNE downward, why I believe that declines are an opportunity rather than concern, and what we can expect to see from Sunedison stock moving forward.
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Why SUNE Has Been Falling As Of Late
When it comes to Sunedison, there is one big issue that’s unique to the company, and one relatively minor cause for concern across the solar industry as a whole. Here’s what is concerning investors:
- Debt – First and foremost, the larger issue that is striking fear among investors is debt. After all, no one likes debt! Unfortunately however, SUNE has a massive amount of it. Not to mention, the company recently underwent a debt restructuring process that made the interest rate on their current debt far less than appealing.
- SCTY Guidance – A factor that’s been putting further resistance on SUNE more recently is SolarCity Corp (NASDAQ: SCTY). SCTY is a leader in solar. As such, anything that the company deals with is likely a concern to investors in other solar companies like Sunedison. Unfortunately, a couple of days ago, SCTY released negative guidance. While earnings were overwhelmingly positive, guidance shook the solar industry as a whole.
Why I’m Not Concerned
While the issues above may be concerning to some investors, I have to say that I’m not concerned in the least. First and foremost, one of the reasons for the decline is what we’re seeing from a completely different company. The reality is that unless there is fundamentally bad data on SUNE, I don’t play into the sentiment trends. Ultimately, if SUNE were to release one bit of positive news, the sentiment toward the stock would flip back to bullish very quickly, and I’m sure that’s coming down the line at some point.
To address the other issue, I’m also not concerned about the debt. I become concerned about debt when company’s don’t have enough assets to pay off their debt with quite a bit of excess. However, SUNE doesn’t have this issue. In fact, if the company were to sell 100% of its assets, it would easily pay off its debt and then some. In fact, after paying off its debt, it would have $14 per share to give to its investors. Given these numbers, it’s clear that SUNE is heavily undervalued.
What We Can Expect To See Moving Forward
Moving forward, I have an incredibly bullish opinion of what we can expect to see from SUNE. While the short-term outlook may not be painted as brightly, through smart acquisitions the company has positioned itself to take a large piece of the solar industry in the long run. All in all, I’m excited to see where the stock goes from here.
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What Do You Think?
Where do you think SUNE is headed and why? Let us know your opinion in the comments below!
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