Solar Is Ready for Takeoff

We are just two days away from the start of an exciting earnings season for solar, and I can barely contain my excitement. So, what should we be keeping our Foolish eyes on?

Kickoff in the U.S.
First Solar
(Nasdaq: FSLR  ) reports results on Thursday, and analysts have been raising estimates all the way up to $1.94 per share on the quarter. That's a nice increase from $1.79 a year ago but not the kind of growth I'm going to write home about. What we really want to watch is cost per watt and gross margin, two metrics that are keys to staying ahead in solar. Last quarter, First Solar had gross margins of 48.4% and cost per watt of $0.76. Both lead the industry, and if it is going to stay ahead of more efficient panels, costs are going to have to keep falling.

Moving to China
Chinese manufacturers have to continue lowering cost per watt to keep up with First Solar. Crystalline silicon manufacturers have relied on falling silicon prices to become more competitive, but silicon doesn't have much further to fall, putting the onus on non-Si costs this quarter.

Trina Solar's (NYSE: TSL  ) earnings estimates for this quarter have nearly doubled over the last three months to $0.83 per share. Not bad for a stock trading at $27.50. At Yingli Green Energy (NYSE: YGE  ) analysts are expecting $0.30 per share, but analysts have been increasing estimates, so we could see a surprise on the upside.

Today, JA Solar (Nasdaq: JASO  ) gave us a little peak, increasing its shipment guidance for the third quarter to 410 MW from 375 MW. That's a whopping 31.8% increase from shipments in the second quarter. Could we see a blowout quarter from JA Solar?

And back home again
At both Sunpower (Nasdaq: SPWRA  ) and Evergreen Solar (Nasdaq: ESLR  ) , we need to see not only demand for their products but also rapidly falling costs to stay competitive. At Evergreen in particular, management needs to prove that their cost reduction plans are taking effect for me to stay on this bandwagon.

Check back in on Friday for my take on how First Solar kicked off earnings season.

Interested in reading more about solar? Add one of these companies to My Watchlist, and My Watchlist will find all of our Foolish analysis on this stock.

More on Solar:

Fool contributor Travis Hoium is long shares of First Solar and Sunpower. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

First Solar is a Motley Fool Rule Breakers pick. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On October 28, 2010, at 11:17 AM, jrmart wrote:

    These recent SunPower news releases should answer your question about the demand for SunPower's solar systems.

     

    Aug. 30 /PRNewswire-FirstCall/ -- SunPower Corp. (Nasdaq: SPWRA, SPWRB) today announced that SunPower world-leading solar technology has been selected for installation at several U.S. government properties, including for the Department of Energy's National Renewable Energy Lab (NREL), the General Services Administration (GSA), the Navy and the Air Force. SunPower expects to create more than 1000 local jobs during the construction of these projects.  These contracts represent a minimum of 20 megawatts (MW) of new solar projects for SunPower.

    Sept. 22 /PRNewswire/ -- SunPower Corp. (Nasdaq: SPWRA, SPWRB) today announced that the company has been selected to design, build, operate, and maintain the 10-megawatt Dover SUN Park, in Dover, Del. for White Oak Solar Energy, L.P., a wholly owned subsidiary of LS Power Group.

    GENEVA, Oct. 4 /PRNewswire-FirstCall/ -- SunPower Corp. (Nasdaq: SPWRA, SPWRB) today announced that Etrion Corporation (TSX:ETX.to - News), an independent solar power producer, has completed the previously announced definitive sale and purchase agreements to acquire the equity in the first two phases of Montalto di Castro solar park, Italy's largest solar photovoltaic (PV) power park, for approximately euro 49 million. "With the closing of this acquisition, we are well on our way to completing the monetization of 85 MWs in Italy this year," said SunPower CFO Dennis Arriola.  "SunPower's world-leading technology and proven performance of more than 225 MWs of operational power plants in Europe has provided us with a strong set of potential financing partners, including many new participants to the solar market." Montalto di Castro will be Italy’s largest operating photovoltaic park with 85 megawatts in capacity, followed by First Reserve Corp. and SunEdison’s 70-megawatt Rovigo plant. The projects, expected to be the largest in Europe, highlight the attractiveness of Italy’s solar market.

    Oct. 12 /PRNewswire/ -- SunPower Corp. (Nasdaq: SPWRA, SPWRB) today announced that construction is underway on a 3.5-megawatt SunPower solar power system at Macy's, Inc. online fulfillment center in Goodyear, Ariz. The system will deliver the equivalent of 70 percent of the 600,000-square-foot building's electricity demand, and is expected to be the largest solar system on a single rooftop in the U.S. when it is completed in March of 2011. Upon completion of the solar power system in Goodyear, Macy's will have more than 12 megawatts of SunPower systems installed at its facilities.

    Oct. 28 /PRNewswire/ -- SunPower Corp. (Nasdaq: SPWRA, SPWRB) today announced an agreement with Iberdrola Renewables to design and build a 30-megawatt photovoltaic (PV) solar power plant, the San Luis Valley Solar Ranch, on 216 acres of private, former agricultural land in Colorado's Alamosa County. Expected to be fully operational by the end of 2011, construction will begin this year and create approximately 100 jobs.

    Oct. 14 /PRNewswire/ --SunPower Corp. (Nasdaq: SPWRA, SPWRB), a Silicon Valley-based manufacturer of high-efficiency solar cells, solar panels and solar systems, today announced that AUO SunPower Sdn. Bhd., its joint venture (JV) solar cell fabrication facility (Fab 3) in Malaysia with AU Optronics Corp. (TAIEX: 2409; NYSE: AUO), has successfully manufactured the first 100 solar cells, yielding a minimum conversion efficiency of 22.2 percent. "Our initial production runs at Fab 3 exceeded 22 percent conversion efficiency, a truly remarkable achievement," said Tom Werner, SunPower CEO. Construction and ramp of manufacturing in Fab 3 will continue through 2013 and, when complete, will generate more than 1,400 megawatts per year of high-efficiency solar cells.

  • Report this Comment On October 29, 2010, at 10:03 AM, TMFFlushDraw wrote:

    Ok, demand might be there, but what about cost? Profitability? SPWRA has driven very little to the bottom line recently because its high manufacturing costs leave very little margin.

    And on the press releases, SPWRA likes to announce every 10MW, 30MW project to show they are still selling product. FSLR is going to sell ~1,400 MW this year and releases only a handful of big announcements.

    We'll see, I own shares so I would love to see a big number but it will depend on cost per watt.

    Travis Hoium (TMFFlushDraw)

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