Solar energy has been touted as a viable energy source for the future. The need and demand for clean renewable energy has been increasing in recent years. But a New York Times story reports how increasing demand does not mean rising stock prices for solar energy companies.
is partly the result of industrial policies of foreign nations like China that subsidize solar energy. In short, these subsidies have pushed the price of solar energy panels down worldwide. So the tumble in these prices can squeeze profit margins and push down share prices of solar companies like SolarCity Corp (NASDAQ:SCTY), SunPower Corporation (NASDAQ:SPWR) and Sunedison Inc (NYSE:SUNE).
However, a consensus of analysts favors investing in these and other similar outfits for the long term. But these companies’ profits are rather weak, and some investors have been burned by serious share price volatility in this sector.
The company is a leader in clean energy services like solar power. Solar City’s recent financial reporting shows that revenues are on the rise (an indicator of future earnings growth).
In fact, revenues were up – $30.0 million in the latest Q1/2013 from $24.8 million compared to the same quarter in 2012. But the outfit missed earnings expectations in the latest quarter – a loss greater than many analysts were expecting. Shares are presently trading around $37.50 coming on the heels of a serious correction from a 52 week high of $52.77. And another 61+ million shares are now eligible for trading, which could push the price lower in the short-term.
That said, the company recently announced a new zero-down financing program for home builders. This appears to be a play to capitalize on a nascent recovery in the housing market. The program enables homebuilders in six states – four in the west and two in the eastern US – to offer solar power in new residential communities with no upfront costs.
Further, Solar City has previously made the use of solar panels more feasible through a creative solar lease program. And observers in the solar panel sector believe this leasing model will become a source of future revenues. Meanwhile, investors should consider holding off until the likely sale of newly available shares establishes a floor.
SunPower Corporation (NASDAQ:SPWR)
SunPower Corporation (NASDAQ:SPWR) designs, manufactures, and delivers solar electric systems for residential, commercial, and utility-scale power plant customers worldwide.