Energy Business

After a Big Sell-Off, SunPower's Earnings May Recapture Investor Attention

Solar power has seen its shares of ups and downs, and SunPower Corp. (NASDAQ: SPWR) has certainly been an example of big ups followed by big downs. With more than a 10% gain after earnings, some investors and traders may be looking at it much closer.

SunPower managed to beat Wall Street consensus expectations, with revenues rising to $476 million in the third quarter from $436.3 million in the same quarter of 2018. The solar player’s net loss of $15 million came to $0.11 per share. After adjusting for gains and write-downs, SunPower’s adjusted earnings used by analysts were positive at $0.07 per share.

Refinitiv had its consensus estimates pegged at $0.02 in adjusted earnings per share, but the FactSet consensus was $0.07 in adjusted earnings per share and revenues of about $473 million. SunPower’s net income in the same quarter a year ago was $121.5 million, or $0.75 per share.

The company’s three main segments in solar panels are for residential, commercial and power plant customers. Its earnings release showed a continued strength in U.S. and international distributed generation markets, and it posted a record quarter in residential and new homes bookings, while also launching its Equinox Storage solution for the housing markets. The company also said that its backlog is greater than 40,000 homes. Tom Werner, SunPower’s CEO and board chair, said:

Our third quarter results reflect continuing execution of our strategic plan. We met our financial outlook for the quarter and demonstrated ongoing progress against our key growth initiatives including the further ramp of our Maxeon 5 technology scale-up, adding to our storage and services offerings, and expanding our digital platforms.

SunPower also gave fourth-quarter guidance that now calls for revenue to be in a wide range of $520 million to $720 million. The corporate outlook was shown as follows:

  • On a GAAP basis, revenue of $520 million to $720 million, gross margin of 11% to 12% and net loss of $28 million to $8 million.
  • On an adjusted basis (used by investors and analysts), revenue of $520 million to $720 million, and gross margin of 16% to 19%.
  • Adjusted EBITDA of $74 million to $94 million.
  • Megawatts deployed in the range of 445 MW to 645 MW.

Refintiv’s consensus estimates are $0.23 in earnings per share and $620 million in revenues, while FactSet’s consensus estimates are $0.28 per share and $630 million.

With the S&P 500 up over 20% so far in 2019, SunPower’s shares were up about 69% year to date. Where this gets complicated, even after a bounce of more than 10% to $9.30 after earnings, is that this was a $15 stock as recently as September 23, 2019. Its shares slid sharply lower and lost more than one-third of their value by the end of the first week in October, and they had a pre-earnings close of $8.40.

It would be easy to pick apart the earnings report had shares been in a flatline pattern in recent weeks, but a sell-off of almost 50% from peak to trough probably has more investors interested in crunching some numbers for a closer look here.