Shares in leading solar PV inverter supplier SolarEdge Technologies (SEDG) declined as The company’s financial performance was disappointed in the third quarter. Third quarter results were weak largely due to the company’s difficult trading business, which includes large area roof, floor, carport and floating solutions. These segments are not performing well given the current economic scenario. SEDG reported a slower than expected commercial supply rate in Europe as the reason for building up inventory. SEDGs Sales fell by 17.7% compared to the previous year $ 338.10 million in the third quarter ended September 2020 while operating income declined 54% year over year to $ 30.39 million.
Many companies like Enphase Energy, Inc. (ENPH), First Solar, Inc. (FSLR) and SunPower Corporation (SPWR) have made profits in recent months despite the pandemic interruption, largely due to strong fundamentals and strategic partnerships that have been formed to counter the slump.
With the new Biden administration expected to support the green energy industry, these companies are well positioned to overtake SEDG and become industry leaders.
Enphase Energy, Inc. (ENPH)
ENPH is an energy technology company that develops, manufactures and sells software-controlled solar photovoltaic solutions worldwide. The company manufactures semiconductor-based microinverters that efficiently convert energy at the level of individual solar modules and make it easier to monitor and control the energy.
November 9ththENPH announced that Cutler Bay Solar Solutions has installed 1.5 MWh of its storage systems in homes in Florida. On October 20, ENPH announced a similar strategic partnership with SunCool Energy to supply Enphase storage systems in South Florida. This will significantly increase ENPH’s market reach along with its revenue.
ENPH revenue increased sequentially 42.2% to $ 178.50 million for the third quarter through September 2020. Operating income rose 53.5% year over year to $ 51.76 million, while earnings per share increased 24% year over year to $ 0.31. Non-GAAP gross margin increased 104 basis points to 41% over the period.
The consensus-based EPS estimate of $ 0.42 for the fourth quarter through December 2020 shows an improvement of 7.7% year over year. ENPH also has a formidable earnings surprise history as it beat EPS estimates on the road for each of the past four quarters. The consensus revenue estimate of $ 255.23 million for the fourth quarter shows an increase of 21.5% year over year. The share has gained 348.6% since the beginning of the year.
How does ENPH stack up for the POWR ratings?
A for trade grade
A for peer grade
B for Buy & Hold Grade
B for the overall POWR rating.
The stock is number 1 among the 16 stocks in the Solar Industry.
First Solar, Inc. (FSLR)
FSLR is a manufacturer and supplier of photovoltaic solar modules and PV power plants on a utility scale. It operates in two segments worldwide – modules and systems. The Module segment is responsible for the development of cadmium telluride solar modules for converting sunlight into electricity, while the Systems segment is responsible for the provision of power plant solutions.
September 23rdapproxFSLR announced that JP Energie Environment has selected its photovoltaic solar modules to operate the Labrade solar power plant in Europe. The delivery of over 400 projects in France alone would establish FSLR as the world’s leading provider of solar solutions.
FSLR recently entered into an agreement with Vistra Corp. closed, after which the company will supply its solar PV modules to power Vistra’s five solar projects across Texas. This makes FSLR a reliable PV manufacturer in the solar industry and significantly increases its sales.
FSLR’s net sales increased 69.6% year over year to $ 927.57 million in September 2020. Net income increased 406.3% year over year to $ 155.04 million, while gross profit increased 111.8% year over year to $ 293.02 million. Earnings per share increased 403.4% year over year to $ 1.46.
The consensus-based EPS estimate of $ 3.71 for the current year shows an improvement of 150.7% over the previous year. Additionally, FSLR outperformed EPS estimates on the road for three of the past four quarters, which is impressive. Consensus revenue estimate of $ 3.02 billion for the next year shows growth of 6.6% over the same period last year. The share has gained 45.5% since the beginning of the year.
FSLR’s strong fundamentals are reflected in the POWR ratings. It has a buy recommendation with a “B” for Trade Grade and Buy & Hold Grade. It’s number 2 in the same industry.
SunPower Corporation (SPWR)
SPWR is an American energy company that offers solar solutions worldwide. The company operates in two segments – SunPower Energy Services and SunPower Technologies. It supplies panels and system components, commercial rooftop systems, and floor-mounted solar power systems. Direct and third party providers.
On 22nd of SeptemberndSPWR announced that it has secured funding commitments from Hannon Armstrong Sustainable Infrastructure Capital, Inc. for its residential solar leasing and new Solar Plus storage program. The company expects this new fund to help meet growing customer demand soon.
SPWR recently announced Low Annual Percentage (APR) loans for US solar consumers. This affordable financing solution is designed to reduce monthly payments for consumers, thereby increasing the demand for SPWR products for home use.
SPWR’s solar services revenue increased 12.7% year over year to $ 5.90 billion. Net income rose 197.1% year over year to $ 44.63 billion, while earnings per share rose 136.3% year over year to $ 0.26.
The consensus-based EPS estimate of $ 0.36 for the next year shows an improvement of 256.5% over last year. Additionally, SPWR outperformed EPS estimates on the road for three of the past four quarters, which is impressive. Consensus revenue estimate of $ 1.42 billion for the next year shows growth of 19% over the same period last year. The share has gained 140.1% since the beginning of the year.
The promising outlook from SPWR is reflected in the POWR ratings. It is rated “A” for Trade Grade and Peer Grade and “B” for Buy & Hold Grade. It ranks third among the 16 stocks in the solar industry.
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ENPH shares were trading at $ 116.59 per share on Friday afternoon, down $ 0.62 (-0.53%). Since the beginning of the year, ENPH is up 346.19%, while the benchmark index S&P 500 is up 12.86% over the same period.
About the author: Imon Ghosh
Imon is an investment analyst and journalist with a passion for financial research and writing. She started her career at Kantar IMRB, a leading market research and consumer advice organization. More…