A Lone Bright Spot Among Solar Stocks

It's been a tough quarter for solar companies, but there's one supplier that blew the market away with earnings yesterday. GT Solar (Nasdaq: SOLR  ) shocked investors again with a blowout quarter yesterday as one of the few bright spots for the industry.

Revenue during the fourth quarter at GT Solar increased 39.5% from last year to $271.6 million, driven by photovoltaic products. The sapphire business,which is just getting off the ground, accounted for only $6.4 million in revenue this quarter. Net income for the quarter was $51.9 million, or $0.41 per share, down slightly from $0.46 per share in the third quarter. Analysts had expected revenue to be $223.2 million and earnings per share of $0.34, so this was a beat for the company.

But first-quarter outlook dampened the parade today, leaving shares to fall consistently from their opening high. Due to revenue recognition scheduling, GT Solar expects first-quarter revenue of just $140 million to $150 million and earnings per share between $0.08 and $0.11. Both ranges were well below expected ranges from analysts.

If you're worried about one quarter, first-quarter outlook may be a red flag, but I prefer to look at the full-year revenue forecast of $1 billion to $1.1 billion and earnings per share forecast of $1.55 to $1.85. That's up dramatically from a previous forecast of $1.25 to $1.50 per share. Even if next quarter is a bit disappointing on the surface, bookings have grown quickly in the quarter to a backlog of nearly $1.2 billion, so next year looks very solid.

Operating momentum is certainly on GT Solar's side right now, with the sapphire business picking up steam and solar manufacturers continuing to expand. But customers Trina Solar (NYSE: TSL  ) , Yingli Green Energy (NYSE: YGE  ) and LDK Solar (NYSE: LDK  ) all posted weak earnings or outlooks recently. Since this is GT Solar's bread and butter, if those companies decide to slow the pace of expansion, it would also weigh on the supplier.

Right now, I'm not overly concerned about a slowdown, which would likely be more than a year down the road. With shares pulling back in trading today, this is a prime opportunity for investors looking to get into this stock, and I think GT Solar is one of the best buys in the solar industry.

Interested in reading more about GT Solar? Click here to add it to My Watchlist, which will find all of our Foolish analysis on it.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

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  • Report this Comment On May 24, 2011, at 4:30 PM, pipsters wrote:

    i guess the fool is the guy who wrote this article? did he not even bother to read GT solar news today? well, maybe he should call it GT Advanced Technologies, since they are distancing themselves from the solar industry!

    a very wise move i think since this sector is headed for consolidation and they want nothing to do with that.

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