Just a little less than 3 months ago, residential solar provider Sunrun (RUN - Free Report) was the Zacks Bull of the Day and also featured on our Top Stocks video segment.

What a difference 3 months makes…

After an increase of nearly 30% during that period - even as analyst earnings estimates have been revised sharply downward - Sunrun shares now carry a lofty valuation and a Zacks Rank #5 (Strong Sell).

It seems to be a case of Sunrun coming too far, too fast.

The company had been a favorite on the street due in no small part to truly impressive sales growth and the opportunity created by a mandate from the state of California to have solar electricity installed on all new homes by 2020.

In December of 2018, the California Building Standards Commission approved the measure, requiring all builders of new homes to include solar panels and generation hardware as part of the purchase price of every new home built. It seemed like a home run for Sunrun, who pioneered the use of the Power Purchase Agreement (PPA), which allows homeowners to spread the cost of solar energy over a longer period of time.

The skies started to cloud over however, as investors came to realize that including solar energy would add approximately $8,400 to the purchase price of a new home.

A recent study from the National Association of Homebuilders found that each $1,000 increase in the price makes a home unaffordable for approximately 53,000 households. At $8,400, the California mandate would leave almost 450,000 households priced out of the new home market.

Sunrun had also been the beneficiary of the retreat of Tesla (TSLA - Free Report) from the home energy market. Tesla cited the high cost of customer acquisitions as the main driver for its decision. Though Sunrun stands to gain additional market share left by Tesla, they have the same basic economic problem with acquisition costs that the rest of the industry has.

Like Tesla, Sunrun also invested heavily in an energy storage device that allows customers to store excess energy generated during daylight hours to be used overnight or during inclement weather. Unfortunately, just as has been the case with Tesla’s Powerwall, sales have been slow and residential battery storage has been relegated to an expensive toy on high-end homes.

Though the Zacks Consensus Estimates still show enormous growth over the year ago figures, those estimates have been slashed, with the full year 2019 consensus falling from $1.37/share 90 days ago all the way to $0.71/share.

2020 estimates have fallen even more, from $1.48/share to $0.48/share.

Obviously, a 2020 estimate that’s 36% below 2019 is not a good sign.

While residential solar energy generally represents thousands of dollars in savings over the life of the system compared to using power exclusively from the grid, the additional cost leaves it out of reach for many consumers. Intense competition in the industry leaves solar firms squeezed from both sides.

If you caught the recent runup in Sunrun, you have an excellent gain on your hands, but the worsening financials mean that there may not be much more room for further gains in the near future.

Investors in solar energy would be better off considering solar component manufacturerEnphase Energy (ENPH - Free Report) , a Zacks Rank #1 (Strong Buy) or SunPower Corp (SPWR - Free Report) , a Zacks Rank #2 (BUY).