A few industry primes including First Solar (FSLR), SunPower (SPWR) and SolarCity (SCTY) released their Q3 results yesterday. FSLR spread strong optimism into the sector by beating estimates and providing an upbeat guidance and SPWR surprised the market with a buoyant Q4 revenue guidance that took its shares soaring despite the earnings and revenue miss. On the other hand, SCTY dampened investors’ mood and its shares tumbled on a big earnings miss (read: 3 Hit and Flop Zones of Q3 and Their ETFs).
Let’s dig into their earnings in detail below:
First Solar Earnings in Focus
After the market closed yesterday, the largest U.S. solar manufacturer reported chartbuster Q3 results that surpassed our estimates on both the top and the bottom lines. Earnings per share of $3.38 strongly beat the Zacks Consensus Estimate of $1.55 and were well ahead of the year-ago earnings of 93 cents. Revenues climbed 46% year over year to a record $1.3 billion and edged past our estimate of $$1.1 billion.
For the full year, the company raised its earnings per share to $4.30–$4.50 from $3.30–$3.60 while reiterated its revenue outlook in the range of $3.5–$3.6 billion. The Zacks Consensus Estimate for earnings and revenues are currently pegged at $2.98 per share and $3.54 billion, respectively.
Shares of this thin-film solar PV maker jumped 12.8% in after-market hours following the solid earnings announcement (read: 5 Sector Favorites for Q3 Earnings & Their Hot ETFs).
SunPower Earnings in Focus
Earnings per share came in at 3 cents, missing the Zacks Consensus Estimate of 14 cents and decreasing from the year-ago earnings of 30 cents. Revenues dropped 42.6% year over year to $380.2 million which lagged our estimate of $418 million.
The second-largest U.S. solar manufacturer expects revenues in the range of $1.25–$1.30 billion for the fourth quarter and $2.50–$2.55 billion for the full year. The current Zacks Consensus Estimate is pegged at $1.2 billion and $2.49 billion for the fourth quarter and full year, respectively. Further, the full-year earnings per share are expected in the range of $1.95–$2.05; the midpoint of which is much higher than our current estimate of $1.29.
Despite the miss, the stock surged 11.1% in regular trading yesterday on the back of an unbelievable Q4 revenue guidance, which is more than double the year-ago quarter and accounts for half of the fiscal full year-guidance.
SolarCity Earnings in Focus
The largest U.S. residential solar installer posted wider-than-expected loss of $2.10 per share against the Zacks Consensus Estimate of loss of $1.99 and deteriorated from the year-ago loss of 75 cents. Revenues almost doubled to $113.9 million, beating our estimate of $107 million. The company made a record 256 megawatts (MW) of solar panels installments during the quarter, up a whopping 86% year over year (see: all the Alternative Energy ETFs here).
SolarCity expects installations of new solar panels to reach 280-300 MW in the fourth quarter, which represents year-over-year growth of 58–69%. This would translate into full-year installations of 878-898 MW, which is much below its prior annual guidance. Additionally, the company initiated 2016 guidance of 1.25 GW installed, suggesting a healthy year-over-year growth of 41%.
Further, the company projects adjusted loss per share of $2.60 to $2.75 for the ongoing quarter, much wider than the current Zacks Consensus Estimate of a loss of $2.34. Going into the next year, the company is focusing on cost reductions and cash flow strategies. Also, it aims a positive cash flow by year-end 2016. It expects to continue leading the industry in MW installed with the lowest costs and strong returns.
Following the sluggish results after the closing bell, shares of SCTY dived 18.1%.
ETFs in Focus
Given the string of earnings results and some encouraging numbers, solar ETFs are on investors’ radar for the coming days. There are currently two funds available in the space and are detailed below:
Guggenheim Solar ETF (TAN)
This ETF follows the MAC Global Solar Energy Index, holding 31 stocks in the basket. First Solar, SunPower and SolarCity take the first, fourth and fifth positions in the basket with a combined 20% share. American firms dominate the fund’s portfolio with nearly 50.9% share, followed by Hong Kong (19.8%) and China (17.5%). The product has amassed $259.6 million in its asset base and trades in solid volume of around 222,000 shares a day. It charges investors 70 bps in fees per year. The fund has lost over 11% in the year-to-date time frame and has a Zacks ETF Rank of 4 or ‘Sell’ rating with a High risk outlook (read: TAN vs. YLCO: Which is the Better Solar ETF?).
Market Vectors Solar Energy ETF (KWT)
This fund manages $17.9 million in its asset base and provides global exposure to 28 solar stocks by tracking the Market Vectors Global Solar Energy Index. Here, FSLR and SCTY take the top and third spots, respectively, with a combined 14.5% share each while SPWR makes up for the eighth place in the portfolio at 4.5%. In terms of country exposure, U.S. and China account for the top two countries with 33.1% and 32.1% allocation, respectively, closely followed by Taiwan (17.1%). The product has an expense ratio of 0.65% and sees paltry volume of about 2,000 shares a day. The ETF has lost 11.7% in the year-to-date time frame.
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FIRST SOLAR INC (FSLR): Free Stock Analysis Report
SOLARCITY CORP (SCTY): Free Stock Analysis Report
SUNPOWER CORP-A (SPWR): Free Stock Analysis Report
GUGG-SOLAR (TAN): ETF Research Reports
MKT VEC SOLAR (KWT): ETF Research Reports
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