Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Small Differences Are Magnified in Solar

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

The difference between solar manufacturers is razor thin right now, and any competitive advantage can mean the difference between survival and oblivion. In recent earnings releases, we've seen just how much small differences can impact financial results.

The solar industry can be measured by two main criteria: module efficiency and cost per watt. Without one, the other is useless, because they interact to define a company's competitive position.

Below I've compiled a list of five top solar manufacturers with their sequential change in sales, gross margins, and top module efficiency. Gross margins should give us a proxy for cost per watt. This should give us an idea of how module efficiency is impacting margins and sales in this small sample set.


Q/Q Sales Change

Gross Margin

Top Module Efficiency

Suntech Power (NYSE: STP  ) (22.3%) 9.9% 14.9%
Yingli Green Energy (NYSE: YGE  ) (39.7%) 3.0% 16.2%
Trina Solar (NYSE: TSL  ) (9.6%) 7.1% 16.4%
Canadian Solar (Nasdaq: CSIQ  ) (5.1%) 8.7% 16.5%
SunPower (Nasdaq: SPWR  ) (20.1%)* 7.9% 19.6%

Source: Company filings and datasheets. *SunPower gets a significant portion of revenue from utility and power plant sales, which are very volatile quarter to quarter.

As you can see, there appears to be some correlation between module efficiency and financial health. Of the Chinese manufacturers, Canadian Solar had the smallest drop in sales and maintained one of the strongest margins, partially due to higher-efficiency modules. Trina and Yingli simply don't compare well on these measures.

Another important thing to note from the table above is that SunPower was able to generate margins comparable to lower-cost manufacturers, despite higher costs. This underscores the importance of efficiency in the industry. As efficiency goes up, balance of system costs goes down.

It's these efficiency advantages that have compelled me to give outperform CAPScalls for both SunPower and Canadian Solar. They're both underperforming the market right now, but over the long term I think these two companies will be winners in the solar industry.

Keep up with all of our Foolish solar analysis of solar stocks with My Watchlist. Just add your favorite stocks below and My Watchlist will bring you the articles you want in one safe place.

Fool contributor Travis Hoium owns shares of SunPower and manages an account that owns shares of SunPower. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

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.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1805157, ~/Articles/ArticleHandler.aspx, 10/28/2016 4:43:04 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 7 hours ago Sponsored by:
DOW 18,169.68 -29.65 -0.16%
S&P 500 2,133.04 -6.39 -0.30%
NASD 5,215.97 -34.29 -0.65%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/27/2016 4:00 PM
CSIQ $14.99 Down -0.31 -2.03%
Canadian Solar CAPS Rating: **
SPWR $7.75 Down -0.40 -4.91%
SunPower CAPS Rating: ****
STPFQ $0.00 Down +0.00 +0.00%
Suntech Power Hold… CAPS Rating: *
TSL $10.34 Down -0.02 -0.19%
Trina Solar CAPS Rating: **
YGE $3.91 Down -0.02 -0.51%
Yingli Green Energ… CAPS Rating: *