SunPower Corporation (SPWR) is a leading Distributed Generation Storage and Energy Services provider in North America. The company offers Equinox, a solar platform utilizing alternating current (AC) panel architecture, and EnergyLink monitoring hardware products to homeowners, businesses, governments, schools, and utilities.

It has been serving its customers through ground-breaking innovation and access to leading solar solution technologies. This has allowed the stock to gain 231.9% this year. This impressive performance combined with several other factors has helped SPWR earn a “Buy” rating in our proprietary rating system.

Here is how our proprietary POWR Ratings system evaluates SPWR:

Trade Grade: A

SPWR is currently trading above its 50-day and 200-day moving averages of $22.99 and $13.42, respectively, indicating that the stock is in an uptrend. The stock’s 93.8% gains over the past three months reflect solid short-term bullishness.

SPWR revenues have increased by 26.2% sequentially to $274.80 million in the third quarter ended September 30, 2020. Its adjusted EBITDA has increased 300% sequentially to $8.57 million over the same period, while non-GAAP EPS has improved 60% sequentially.

On September 22nd, SPWR secured financing commitments from Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI) for its residential solar lease program and a new solar plus storage program, SunPower Equinox system with SunVault storage. This funding will help them meet the expected demand of customers looking for solar solutions.

Buy & Hold Grade: C

In terms of proximity to its 52-week high, which is a key factor that our Buy & Hold Grade takes into account, SPWR’s positioning is not favorable. The stock is currently trading 19.6% below its 52-week high of $32.19.

The company’s net revenue over the past three years has grown at a negative CAGR of 3.36%. This can be attributed to the extreme dependence of industries on fossil fuels and the reluctance of governments in framing green policies. However, the company is witnessing record bookings and backlogs in New Homes and 2-box storage solutions, which is driving its financials lately.               

Peer Grade: C

SPWR is currently ranked #8 of 19 stocks in the Solar Industry. Other popular stocks in this industry are Enphase Energy, Inc. (ENPH), SolarEdge Technologies, Inc. (SEDG), and Sunrun Inc. (RUN).

ENPH, SEDG, and RUN have gained 561.8%, 235.6%, and 388.1% year-to-date, respectively. This compares to SPWR’s 231.9% returns over this period.

Industry Rank: C

The Solar Industry is ranked #92 out of the 123 StockNews.com industries. The companies in this industry are involved in designing, manufacturing, installing, maintaining, and selling solar energy systems. They primarily serve residential, commercial, and industrial electricity demand, which increases with population and economic growth.

The industry was severely impacted by the COVID-19 outbreak. Several countries are experiencing a second wave of the virus and the new strain. However, growing concerns over environmental issues surrounding fossil fuels have boosted interest in renewable energy sources such as solar. So, the industry is expected to witness significant growth in the upcoming years.

Overall POWR Rating: B (Buy)

SPWR is rated “Buy” due to short-term bullishness and the industry’s growth prospects, as determined by the four components of our overall POWR Rating.

Bottom Line

Despite soaring more than 230% so far this year, SPWR has the potential to grow further based on its continued business growth, and favorable earnings and revenue outlook.

Analyst sentiment, which gives a good sense of a stock’s future price movement, is pretty impressive for SPWR. Analysts expect SPWR’s revenues to rise 23.2% year-over-year to $1.44 billion next year. The consensus EPS estimate indicates a 186.8% improvement to $0.33 over the same period.           

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SPWR shares were trading at $25.56 per share on Thursday afternoon, down $0.33 (-1.27%). Year-to-date, SPWR has gained 227.69%, versus a 17.71% rise in the benchmark S&P 500 index during the same period.

About the Author: Rishab Dugar

Rishab is a financial journalist and investment analyst. His investment approach is to focus on quality stocks, trading at low prices, with business models that he readily understands. More...

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