The growing demand for sustainable energy sources and zero-emission alternatives has driven significant growth in the solar industry because it is currently the most efficient and cost-effective renewable energy source.
President Biden’s $2 trillion infrastructure spending proposal stands as one of the largest federal efforts to curb the country’s greenhouse gas emissions. As a result, solar installations are expected to quadruple from current levels by 2030.
However, not all solar stocks are expected to benefit from the industry tailwinds. Wall Street analysts expect solar stocks SunPower Corporation (SPWR) and Sunworks, Inc. (SUNW) to underperform in the near term due to their weak fundamentals.
SunPower Corporation (SPWR)
SPWR in San Jose, Calif. designs, manufactures and delivers solar panels and systems worldwide. It operates through Residential; Light Commercial; Commercial and Industrial Solutions; and other segments.
SPWR’s operating loss declined 83.8% year-over-year to $3.34 million in its fiscal first quarter, ended April 4. Its net loss grew 2,215.2% from its year-ago value to $49.50 million. And the company’s loss per share increased 2700% year-over-year to $0.28. Its cash and cash equivalents balance decreased 6.1% from the prior year quarter to $229.44 million over this period.
Analysts expect SPWR’s revenues to increase 45.9% year-over-year to $400.83 million in the current quarter. A $0.11 consensus EPS estimate for the current quarter represents a 375% rise from the same period last year. Shares of SPWR have slumped 31.8% in price over the past six months, and 14.7% intraday.
Of the nine Wall Street analysts that rated SPWR, one rated it Buy, five rated it Hold while three rated it Sell.
Sunworks, Inc. (SUNW)
SUNW provides photovoltaic-based power systems for the agricultural, commercial, industrial, public works, and residential markets. The company also provides a range of installation services, including design, system engineering, procurement, permitting, construction, grid connection, warranty, system monitoring and maintenance. SUNW is based in Roseville, Calif.
On June 7, SUNW released the pro forma results for the combined company with Solcius LLC, (assuming they had been combined on January 1, 2020). The merged company reported a $4.20 million operating loss and an approximate $410 million net loss in the first quarter of 2021.
SUNW’s revenue declined 50.1% year-over-year to $6.17 million in its fiscal quarter ended March 31. Its gross profit stood at $91,000, down 95% from the same period last year. Its operating loss decreased 25.9% from its year-ago value to $4.81 million. The company’s loss per share stood at $0.19.
A $125.3 million consensus revenue estimate for the current year indicates a 230.5% increase year-over-year. However, SUNW’s EPS is expected to remain negative at least until next year.
SUNW share price has slumped 32.9% over the past six months. The stock has lost 17% over the past month.
An $8.00 median price target for the stock indicates a potential 4.7% downside from its last closing price of $8.39.
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SPWR shares were trading at $23.50 per share on Thursday afternoon, down $0.44 (-1.84%). Year-to-date, SPWR has declined -8.35%, versus a 17.04% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics. More...
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