Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

SunPower Corporation (SPWR), First Solar, Inc. (FSLR), SolarCity Corp (SCTY): The Solar Industry Welcomes Growth, But Investors Beware

Page 1 of 2

SunPower CorporationThese are heady days for the solar power industry. Deutsche Bank AG (USA) (NYSE:DB) was the last of three analyst groups that gave glowing reports on the industry, both near and long term. Earlier in 2013, UBS AG and Macquarie Group also had bullish views of the solar industry. The Deutsche Bank report noted in some key markets, such as India and Italy, that solar has already reached unsubsidized grid parity with fossil fuels. Other key markets, including America, Japan and the Middle East, are not far behind. As a result, Deutsche Bank AG (USA) (NYSE:DB) sees the global solar market for 2013 gaining roughly 20% from 2012 levels, to 30 gigawatts. That is roughly the same rated power as 20 state of the art nuclear reactors. Solar panel makers worldwide certainly welcome the growth, and I am going to take a look a few of those companies today.

SunPower Corporation (NASDAQ:SPWR): The technological leader

SunPower Corporation (NASDAQ:SPWR) is the nation’s second largest solar panel maker. It is 66% owned by French oil giant Total, and, while SunPower Corporation (NASDAQ:SPWR) has not turned a profit since 2010, the waiting for Total and other shareholders is very likely over.

Like other large panel makers, SunPower Corporation (NASDAQ:SPWR) is completely integrated as it designs, manufactures, sells and installs solar systems. It claims to have the highest quality product, both in terms of maximum efficiency (21.5%) and smallest footprint. Its panels sit on over 100,000 building roofs worldwide, and it is in the process at this time of constructing two of the largest utility scale plants in the country, collectively known as the 580 megawatt Antelope Valley facility.

By its rather dismal recent financial standards, SunPower Corporation (NASDAQ:SPWR) had a banner first quarter. Sales in the quarter of $634 million blew away the company’s stated expected sales of from $450 million to $525 million. GAAP earnings came to a loss of $54.7 million, or $0.46 per share. But adjusting for a myriad of one-time factors, and non GAAP the company had earnings of $0.22 per share, swamping analysts’ expectations of six cents per share in the quarter. On May 15 the company issued guidance for the balance of the year, with non GAAP revenues of roughly $2.55 billion, and non GAAP earnings of $0.60 to $0.80 per share.

It would seem that this company has turned a corner, and this has been rewarded in the market as the company’s stock is up nearly 3-fold over the past 52 weeks. But I believe the stock price has gotten a little ahead of itself, and would be more comfortable endorsing a purchase of this issue in the mid-teens.

First Solar, Inc. (NASDAQ:FSLR): The 800 pound gorilla looks to move beyond utility scale systems

The largest solar development company in the country is First Solar, Inc. (NASDAQ:FSLR). It had a very solid first quarter, with revenues of $755 million, up 52% from last year’s first quarter. Profits came to $59.1 million, or $0.66 per share. Adjusted earnings were a bit higher at $0.69 per share. Analysts had been expecting earnings of $0.75 per share.

First Solar, Inc. (NASDAQ:FSLR) has always stood out from the other solar makers due to utilizing a proprietary thin film design containing cadmium telluride in its panels, rather than the more typical silicone panels. The good news is that First Solar, Inc. (NASDAQ:FSLR)’s panels are cheaper to produce. The bad news is that they are also less efficient, though the company’s newest panels come in at a respectable 16% efficiency. Since First Solar’s systems have required more panels to yield the same energy, its systems are not rooftop friendly, and First Solar has been utility-scale focused. However, it recently acquired Tetra Sun, and in time should use that company’s cutting edge copper monocrystalline silicon panels, which fit precisely with distributed energy system needs. It won’t be until roughly 2015 that these panels can be brought to market, but with First Solar, Inc. (NASDAQ:FSLR)’s utility expertise and new potential system, the company will have all bases covered.

The future is hazy with the solar industry, as new technological breakthroughs are always possible. A 40% efficient silicon panel system has been developed, but that is far from being commercially available. Unless something like that makes First Solar, Inc. (NASDAQ:FSLR)’s technology antiquated, this company has a bright long-term future.

Page 1 of 2
Loading Comments...