SunPower Beats Expectations Once Again

SunPower (NASDAQ: SPWR  ) announced another blowout quarter, but investors don't quite know how to interpret the latest results. Fourth-quarter GAAP revenue was down 6% to $638.1 million because of a changing mix of lease, module sales, and project sales than a year ago. What's encouraging is that gross margin was up to 20.5% from 6.9% a year ago, and earnings were $0.15 per share.

On a non-GAAP basis, which accounts for systems as they're built and not based on GAAP accounting rules, revenue was $758.2 million, gross margins were 20.4%, and earnings were $0.47 per share. On that basis, analysts were expecting $708.0 million in revenue and $0.28 per share in earnings, so the company outperformed expectations once again.  

Once again, SunPower ran its fabrication facilities at full strength and made progress on a new 350 MW plant that will begin putting out product in about a year. Management even hinted at its next fabrication expansion that will be a "much larger scale" than 350 MW. 

The hole that investors may look at is only 13 MW of solar leases added, well below competitors like SolarCity. The market loves the solar lease right now, and SunPower isn't as large in this market as SolarCity, which is a downside for now. 

Solar demand remains high across residential, commercial, and utility scale markets, and SunPower is one of only a few profitable solar manufacturers in the world. That demand, along with the most efficient panels in the industry, set up the company for future growth once new manufacturing plants start churning out products next year.

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  • Report this Comment On February 13, 2014, at 9:38 AM, DMC wrote:

    Travis, when SPWR had lower than expected revenue at Q2 earnings that the market didn't understand revenue reporting, as you also wrote earlier this week. You made similar comments re Q3 earnings, which you hailed, and now call Q4 a blowout quarter. Meanwhile, after three such wonderful quarters in a row, the stock is only about a dollar more than it was BEFORE Q2 earnings. So when might the market come to grasp what you see? Or did the rise last year get so far ahead of proper levels that the stock is at it's fair value now?

  • Report this Comment On February 13, 2014, at 10:15 AM, stockbutterfly wrote:

    Travis you called it when you said it's all about the margins. Look at the margins! just beautiful. The Stockbutterfly is waiting for the nectar to flow from all those short sellers of SPWR. It's a beautiful day, 3 americans on the same podium and a short seller squeeze is on the way.

  • Report this Comment On February 13, 2014, at 10:17 AM, wpshil78 wrote:

    I think the rise in 2013 got ahead of itself, and the relatively "flat" trading pattern in the last 3 months is an indication that the stock is righting itself.

    Solar had been taken to the woodshed for nearly 5 years, and when prospects and margins started to improve in late 2012/early 2013, I don't think the astounding gains the industry made in general, and SPWR in particular, were unreasonable. My takeaway from all this is that 2013 is the year that solar power went from speculative to a legitimate business. The "easy" gains of 300% are over, but I think there's another 300% to be made over the next 10 years.

    I want to ask, though, my only concern with the quarter, and I haven't found anyone addressing it, is that R&D spending dropped from $68m in Q4 2012 to $58m in the most recent quarter. And that to me is SPWR's competitive advantage. Their panels have an efficiency of ~22% and ~.90/watt cost. Management has stated they think they can produce a 4th generation panel of 25% efficiency for $.75/watt. What is the timing for the next-gen panel, and how are they going to do it with a reduction to R&D in the midst of booming growth?

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