Shares of leading solar PV-inverter supplier SolarEdge Technologies (SEDG) declined as the company’s financial performance disappointed during the third quarter. Third-quarter results were weak primarily due to the company’s struggling commercial business, which includes large-scale rooftop, ground, carport, and floating solutions. These segments are not performing well given the current economic scenario. SEDG reported a slower-than-anticipated commercial deployment rate in Europe to be a reason for the inventory build-up. SEDG’s revenue declined 17.7% year-over-year to $338.10 million in the third quarter ended September 2020, while operating income fell 54% from the year-ago value to $30.39 million.
However, many companies such as Enphase Energy, Inc. (ENPH), First Solar, Inc. (FSLR), and SunPower Corporation (SPWR) managed to generate profits over the past couple of months despite the pandemic disruption, primarily due to strong fundamentals and strategic partnerships formed to counter the slump.
As the incoming Biden administration is expected to support the green energy industry, these companies are well-positioned to overtake SEDG to become industry leaders.
Enphase Energy, Inc. (ENPH)
ENPH is an energy technology company that designs, manufactures, and sells software-driven solar photovoltaic energy solutions globally. The company manufactures semiconductor-based microinverter that efficiently convert energy at an individual solar module level, as well as facilitate energy monitoring and control services.
On November 9th, ENPH announced that Cutler Bay Solar Solutions has installed 1.5 MWh of its storage systems in Florida homes. On October 20th, ENPH announced a similar strategic partnership with SunCool Energy to supply Enphase storage systems in South Florida. This will significantly increase the ENPH’s market reach along with its revenues.
ENPH’s revenue increased 42.2% sequentially to $178.50 million in the third quarter ended September 2020. Operating income grew 53.5% year-over-year to $51.76 million, while EPS rose 24% from the year-ago value to $0.31. Non-GAAP gross margin increased 104 basis points to 41% over this period.
The consensus EPS estimate of $0.42 for the fourth quarter ending December 2020 indicates a 7.7% improvement year-over-year. ENPH has an impressive earnings surprise history as well, as it beat the street EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $255.23 million for the fourth quarter indicates a 21.5% increase year-over-year. The stock has gained 348.6% year-to-date.
How does ENPH stack up for the POWR Ratings?
A for Trade Grade
A for Peer Grade
B for Buy & Hold Grade
B for Overall POWR Rating.
The stock is ranked #1 out of the 16 stocks in the Solar industry.
First Solar, Inc. (FSLR)
FSLR is a manufacturer and provider of photovoltaic solar panels and utility-scale PV power plants. It operates globally in two segments – Modules and Systems. The Module segment is responsible for the development of cadmium telluride solar modules to convert sunlight into electricity, whereas, the Systems segment is responsible for providing power plant solutions.
On September 23rd, FSLR announced that JP Energie Environment selected its photovoltaic solar modules to power the Labrade solar power plant in Europe. Supplying over 400 projects in France alone would establish FSLR as a leading global provider of solar solutions.
FSLR has also recently entered into an agreement with Vistra Corp. under which it will supply its PV solar modules to power Vistra’s five solar projects across Texas. This makes FSLR stand out in the solar industry as a reliable PV manufacturer and significantly increase its revenue.
FSLR’s third quarter ended September 2020 net sales rose 69.6% year-over-year to $927.57 million. Net income grew 406.3% from the prior-year quarter to $155.04 million, while gross profit grew 111.8% from the same period last year to $293.02 million. EPS increased 403.4% from the year-ago value to $1.46.
The consensus EPS estimate of $3.71 for the current year indicates a 150.7% improvement year-over-year. Moreover, FSLR beat the street EPS estimates in three out of the trailing four quarters, which is impressive. The consensus revenue estimate of $3.02 billion for the next year indicates a 6.6% growth from the same period last year. The stock has gained 45.5% year-to-date.
FSLR’s strong fundamentals are reflected in its POWR Ratings. It has a “Buy” rating with a “B” for Trade Grade and Buy & Hold Grade. It is ranked #2 in the same industry.
SunPower Corporation (SPWR)
SPWR is an American energy company offering solar solutions worldwide. The company operates through two segments – SunPower Energy Services and SunPower Technologies. It supplies panels and system components, commercial rooftop, and ground-mounted solar power systems. Directly and third-party distributors.
On September 22nd, SPWR announced that it had secured financing commitments from Hannon Armstrong Sustainable Infrastructure Capital, Inc. for its residential solar lease and new solar plus storage program. The company expects this new fund to help meet the surging customer demand soon.
SPWR has recently announced low-annual percentage rate (APR) loans for U.S. residential solar consumers. This affordable financing solution is expected to lower monthly payments for consumers and thereby, increase the demand for SPWR products for residential use.
SPWR’s revenue from solar services increased by 12.7% year-over-year to $5.90 billion. Net income increased 197.1% from the year-ago value to $44.63 billion, while EPS rose 136.3% from the prior-year quarter to $0.26.
The consensus EPS estimate of $0.36 for the next year indicates a 256.5% improvement year-over-year. Moreover, SPWR beat the street EPS estimates in three out of the trailing four quarters, which is impressive. The consensus revenue estimate of $1.42 billion for the next year indicates a 19% growth from the same period last year. The stock has gained 140.1% year-to-date.
SPWR’s promising outlook is reflected in its POWR Ratings. It is rated “Buy” with an “A” for Trade Grade and Peer Grade and a “B” for Buy & Hold Grade. Among the 16 stocks in the Solar industry, it’s ranked #3.
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ENPH shares were trading at $116.59 per share on Friday afternoon, down $0.62 (-0.53%). Year-to-date, ENPH has gained 346.19%, versus a 12.86% rise in the benchmark S&P 500 index during the same period.
About the Author: Imon Ghosh
Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization. More…