With the increasing adoption of green energy by businesses and households and supportive environmental steps under the Green New Deal announced by the Biden administration, the green energy sector is likely to gain further momentum in the near term.
Amid this green wave, Plug Power, Inc. (PLUG) and SunPower Corporation (SPWR) have been reporting promising results as demand for clean energy is stronger than ever. These two stocks have immense upside potential left based on their strong revenue performance, as small and large businesses alike are aggressively trying to reduce their carbon footprint.
However, SolarEdge Technologies, Inc. (SEDG) and JinkoSolar Holding Co., Ltd. (JKS) that belong to the same industry have been underperforming. They have reported lower revenues and earnings compared to their peers, thereby losing market share. Since these two stocks have been declining, it is advisable to avoid them for now.
Plug Power, Inc. (PLUG)
PLUG is a leading provider of hydrogen fuel cell turnkey solutions and fuel processing technologies for the electric mobility and stationary power markets in North America and Europe. The company provides its services to manufacturing businesses and through retail chains, dealers, and direct sales force.
On October 22nd, PLUG announced the expansion of its GenDrive product with three new fuel solutions for the European market. This product development will support its growing European customer base.
PLUG recently announced a Memorandum of Understanding (MoU) with Linde for demonstrating Plug Power’s ProGen Fuel Cell engine in class 6 and class 8 vehicles, which are expected to hit the market by early 2021.
The company entered into strategic partnerships with Brookfield Energy and Apex Clean Energy to source renewable electricity and build liquid green hydrogen plants. These collaborations will help PLUG achieve its long-term sustainable energy goal.
PLUG’s revenue increased 79.9% year-over-year to $106.99 million in the third quarter ended September 2020. Gross billings rose 73.4% sequentially to $125.60 million.
The consensus EPS estimate for the current year indicates a 13.9% improvement from the year-ago value. The consensus revenue estimate of $323.98 million for the current year indicates a 36.8% growth from the same period last year. The stock has gained 745.6% year-to-date.
How does PLUG stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
A for Peer Grade
A for Industry Rank
A for Overall POWR Rating.
You can’t ask for better. The stock is also ranked #6 out of 59 stocks in the Industrial – Equipment group.
SunPower Corporation (SPWR)
SPWR offers 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 through 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 increase its production capacity.
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 12.7% year-over-year to $5.90 billion in the third quarter ended September 2020. 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 $0.43 for the next year indicates a 326.3% 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 $1.43 billion for the next year indicates 21.4% growth from the same period last year. The stock has gained 194.7% year-to-date.
SPWR’s promising outlook is reflected in its POWR Ratings. It is rated “Strong Buy” with an “A” for Trade Grade, Buy & Hold Grade, and Peer Grade. Among the 19 stocks in the Solar industry, it’s ranked #2.
Stocks to avoid:
SolarEdge Technologies, Inc. (SEDG)
SEDG designs and manufactures direct current (DC) optimized inverter systems for solar photovoltaic installations and monitoring systems. Its products are widely used in communication devices, smart energy management solutions, and a cloud-based monitoring platform. The company’s photovoltaic inverters are used to power residential, commercial, and small utility-scale projects.
SEDG has entered into a four-year agreement with an international solar investor – Enfindus. Under this agreement, SEDG would supply inverters for one gigawatt of a PV system to Enfindus, throughout Europe. This partnership is aimed at helping businesses reduce their energy cost while significantly increasing solar energy production across the continent.
SEDG’s revenue decreased by 17.6% year-over-year to $338.1 million in the third quarter ended in September 2020. Operating income declined 54% from the year-ago value to $66.02 million, while gross profit declined 22.4% year-over-year to $139.31 million in the third quarter.
The consensus EPS estimate of $0.93 for the next quarter ending March 2021 indicates a 2% decline year-over-year. The consensus revenue estimate of $386.08 million for the next quarter indicates a 10.5% decline from the same period last year. The stock has gained 182.5% year-to-date but is currently trading 14% below its 52-week high.
SEDG’s POWR Ratings are consistent with this bleak outlook. It has an overall rating of “Neutral” with a “B” for Trade Grade, “C” for Buy & Hold Grade and Industry Rank, and a “D” for Peer Grade. It is ranked #9 out of 19 stocks in the same industry.
JinkoSolar Holding Co., Ltd. (JKS)
JKS designs develop, manufactures, and sells photovoltaic products like solar modules, silicon wafers, solar cells, recovered silicon materials, and silicon ingots. It sells its products to project developers, system integrators, and distributors; and utility, commercial, and residential customers under the JinkoSolar brand, internationally.
On November 6th, JKS announced that it has entered into a long-term purchase agreement with Tongwei Co., Ltd. for 100,000 metric tons of polycrystalline silicon. This strategic partnership with a key raw materials supplier will contribute to JKS’s long-term business and raise its competitive edge in the solar industry.
JKS has recently announced that it has signed a Module Supply Agreement for the Kozani project of Greece, with Juwi Hellas Renewable Energy Sources. This benchmark project in Europe will make JKS stand out in the solar industry as a reliable PV manufacturer.
JKS’s revenue increased 22.2% year-over-year to $1.20 billion in the second quarter ended June 2020. Operating income declined 40.7% sequentially to $61.50 million, while gross profit declined 8.7% sequentially to $214.14 million.
The consensus EPS estimate of $0.84 for the next quarter ending December 2020 indicates a 40% decline year-over-year. The consensus revenue estimate of $1.52 billion for the next quarter indicates 11% growth from the same period last year. The stock has gained 198.1% year-to-date but is currently trading 24.3% below its 52-week high.
JKS’s poor prospects are also apparent in its POWR Ratings which assigned it a “Neutral” rating. It has a “C” for Trade Grade, Buy & Hold Grade, and Industry Rank, and a “D” for Peer Grade. It is ranked #11 out of 19 stocks in the same industry.
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PLUG shares were trading at $25.98 per share on Wednesday afternoon, down $0.74 (-2.77%). Year-to-date, PLUG has gained 722.15%, versus a 14.24% 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...
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