Zeo Energy Corp. (ZEO) stock intrinsic value fair value estimate & owner earnings analysis

Zeo Energy sells and installs rooftop solar systems for homeowners, mostly in Florida, Texas, Arkansas, Missouri, Ohio and Illinois, with newer customers in California, Colorado, Minnesota, Utah and Virginia, and adds roofing and efficiency upgrades. It became public in March 2024 when the Sunergy solar business merged into a blank-check company. In August 2025 it bought Heliogen, a concentrated-solar and energy-storage technology company, in an all-stock deal. Fewer than 5% of customers pay cash; most finance their systems through a lease with a third-party operator, and Zeo is paid net of the finance company's fees. What the business earns. We measure the cash the business produces for its owners: operating cash flow with short-term swings in receivables and payables removed, stock compensation charged as a real cost, and capital spending needed to stay in business deducted. We also treat bad-debt provisions ($3.4 million in 2025) as a real cost, because they represent revenue never collected. On that basis, the predecessor Sunergy business earned about $5.7 million in 2023 on $109.7 million of revenue, but it was then a private partnership that paid no income tax, granted no stock pay and carried no public-company costs. Since becoming public the picture has reversed: revenue fell to $73.2 million in 2024 and $69.3 million in 2025 (management attributes this to higher consumer financing rates), and owner cash flow was about -$6.5 million in 2024 and -$13.0 million in 2025 (-$0.17 and -$0.26 per share). The large amortization charges of 2024 and 2025 ($4.0 million and $7.6 million) came from customer contracts bought out of the Lumio bankruptcy; they are added back as a sunk purchase cost, those contracts are now fully used up, and no future value is credited to them. We anchor on the two years since the merger, because 2023 describes a different, private business. Before interest, the business lost about $6.4 million in 2024 and $12.9 million in 2025. Recent trend. In the first half of 2026 the loss narrowed to about $6.5 million before interest from about $9.2 million a year earlier, and revenue rose 9% to $29.4 million, although second-quarter revenue fell 11% from the prior year. That filed improvement is the only reason our base case starts 2026 with a smaller loss (about $10 million) than 2025's $12.9 million; the April-September selling season normally makes the second half stronger. The named headwinds. Federal law enacted July 2025 removed the 30% homeowner solar tax credit for systems placed in service after December 31, 2025, and ends the credit for most solar projects completed after 2027. The lease financing most Zeo customers use relies on that second credit. We could find nothing in the filings showing how the business earns a profit once those credits are gone, so none of our cases credits profitable growth after 2027 without evidence. What sits ahead of the common shareholders. Borrowings are tiny (about $0.35 million of vehicle loans and finance leases at June 30, 2026). The important claim is the Sponsor's 1.5 million convertible preferred units: $15 million originally plus accrued dividends, carried at $17.2 million at year-end 2025 and about $17.7 million by mid-2026. At maturity in March 2027 they convert into common stock at the market price, so they are a fixed-dollar claim paid in newly issued shares. We subtract about $18.0 million in total. Cash was only $2.45 million at June 30, 2026 and is needed to run the business. Losses are being funded by selling stock under a $30 million equity purchase agreement with White Lion Capital signed January 27, 2026, which dilutes existing holders. Per-share figures use about 56.5 million economic shares (33.6 million Class A plus 22.9 million exchangeable operating-company units). Bear case (-$0.66). Losses continue at about the 2025 rate of $13 million a year through 2026 and 2027. When the lease-financing credit ends after 2027 no profitable model is in evidence, so operations wind down and only about $5 million of working capital is recovered. The business is worth about -$19.4 million, it owes about $18.0 million ahead of the common, and the shares are about $37.4 million under water. Base case (-$0.47). The cost program disclosed in the 2025 annual report (more sales agents, centralized field offices and new customer-management software) narrows the loss in line with the first-half 2026 improvement: about -$10 million in 2026 and -$7 million in 2027. After the credits lapse at the end of 2027 nothing we can evidence produces a profit, so the story ends there, with about $8 million of working capital recovered. The business is worth about -$8.5 million, it owes about $18.0 million, and the shares are about $26.6 million under water. Bull case (-$0.21). The cost program works well: the loss falls to about $5 million in 2026, the business breaks even in 2027, and from 2028 through 2035 it earns about $2 million a year. That is roughly the 2023 private-company earning level less the costs of being public, and it fades after 2035 because nothing we can see protects it. The business is worth about $6.3 million, it owes about $18.0 million, and the shares are still about $11.7 million under water. Conclusion. In every case the common stock appears to be worth less than nothing, because the business has not produced owner cash flow since going public and the preferred claim of about $18 million sits ahead of it. Continued losses are being funded through dilution of existing holders. To prove this wrong, Zeo would need to show sustained positive owner cash flow at its current size, especially after 2027 without the federal solar credits. Heliogen's technology and engineering services are given no value because the filings show no profitable revenue from them yet. Owner cash flow per share for 2025 depends on an estimated time-weighted share count (about 50.2 million) because the company reports per-share results only for Class A stock.