This Week's Solar Stock Recap

There continues to be incredible momentum in the solar industry. New states and countries are seeing the value of solar, and most importantly, the economic cost of electricity from solar power continues to drop. As it does, we're seeing more and more companies post a profit on top of strong growth rates.

It's these earnings reports where we'll start this week in solar before moving on to news that you may have missed from the industry.

Earnings season is in full swing
First Solar (NASDAQ: FSLR  ) and SolarCity (NASDAQ: SCTY  ) reported earnings this week, and SunEdison (NYSE: SUNE  ) gave us guidance for 2014.

Solar farms like this one are First Solar's bread and butter but it's been left out of the rooftop market. Image courtesy of First Solar.

I'll start with First Solar, which is still a highly profitable company but continues to be on the wrong side of the future of the solar industry. The company earned $4.35 per share for investors in 2013, but gross margins were down from 27.3% in the fourth quarter a year ago to 24.6% last quarter, and plant utilization was just 83%.

The reason First Solar is falling behind is its low efficiency modules, which it says it's addressing with improved CdTe panels and an investment in silicon manufacturing based on TetraSun. Until efficiency improves the company will be put under pressure by companies installing more efficient panels, which lower the balance of system costs needed to install solar and lower the cost of each kW-hr of electricity.

Installations like this one in Maui are driving growth for SolarCity. Image courtesy of SolarCity.

SolarCity had the other big report, and the company surprised investors by delaying most if its financial results. We did find out that deployments were 103 MW last quarter and revenue was $47.3 million, but we don't know much about net income or operating costs. Management also reiterated 2014 guidance of 475-525 MW installed. Basically, SolarCity is performing as it expected, which right now has the market very excited.

Finally, SunEdison said that first-quarter system completions would be 135-165 MW and full-year guidance is for 900-1,150 MW completed. Nearly half of that will be kept on the balance sheet, with the goal of pushing them down to a yieldco later this year. That's expected to result in more retained value for shareholders and is a strategy other installers are using as well.  

News and notes from around solar
Here are a few of the other news items that didn't hit the headlines this week in solar.

  • Trina Solar (NYSE: TSL  ) was awarded a 2 MW rooftop solar project in Jordan, the largest project in the country's history. More importantly, it announced a 24.4% efficient cell jointly developed with the Australian National University. The company is working on building out the manufacturing capacity now.
  • SunEdison announced debt financing for 56 MW of solar projects in the U.K. to be completed by the end of March. It also completed an 18 MW project in India.
  • Canadian Solar (NASDAQ: CSIQ  ) announced a $52 million construction loan from Natixis for a 10 MW project being acquired by DIF Infra 3 RE Canada. The company will also supply 18 MW of modules to Hitachi in Japan.
  • Yingli Green Energy announced that it will supply modules for 54 MW of projects in the U.K. being developed by Grid Essence UK Ltd.  

That's all for this week in solar. Check back to fool.com for the latest on the solar industry and what it means to your investments.

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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.

  • Report this Comment On March 01, 2014, at 11:24 PM, Sampat01 wrote:

    Trina's newly announced Interdigitated Back Contact (IBC) cell with efficiency of 24.4% will put some pressure on SPWR flagship X-series Maxeon Gen 3 (also an IBC cell with 24%+ efficiency). SPWR is no longer the only efficiency story in town and Trina's laser focus on reducing manufacturing costs will almost certainly mean higher competition for SPWR, especially in Japan.

    Trina has really been separating themselves from the pack. Here are some unique aspects that are differentiating Trina in the marketplace:

    1) Product innovation (Trinasmart smartmodule leadership, Trinamount, Dual glass module, State key research lab, 380+ patents and 284.7W 60 cell world record & now the IBC 24.4% efficiency cells).

    2) Brand recognition & Sustainability (Top brand PV seal from Germany , Ranked No. 1 in SVTC Solar Scorecard),

    3) Reliability (Module level management capabilities + best fire safety at the best price point in the market)

    4) International exposure (23 sales offices worldwide and growing, new contracts in key emerging markets such as Thailand and Jordan),

    5) Cost leadership (sub 40 internal module cost + now attacking BoS with smart modules),

    6) Market share gains (20% QoQ growth following a 64% QoQ shipment growth in the last 2 quarters is the best in the industry, market leader in many key markets, No.1 in Australia, 20% market share in UK and Switzerland, 12% in Germany, 10+% in US, 10% in China, rapidly growing in Japan with recent JISQ certification, demonstrates a diversified and risk managed revenue growth.

    7) Strong balance sheet ($802M shareholder equity is best amongst Chinese PV, Ranked No 2 in PWC sustainable growth index),

    8) Project pipeline (600-800MW in 2014 + 50MW Gansu 2013 already in pocket) prove that they are solidly amongst the best in the industry and opportunity for YieldCo in late 2014/early 2015.

    9) Strong relationship with Chinese regulators/government authorities (First on Chinese regulators 109 firms survivors shortlist).

    10) Rapid increase in capacity from 2.8MW to 3.5+MW in a matter of few months, including 500MW module Yabang, 420MW cell Hubei, 300MW estimated Xinjiang, to name a few.

    When industry conditions became favorable, Trina did the smart thing prioritizing creation of sustainable position advantage rather than profits. Superior financial results will only follow soon in the future. The market hasn't yet realized this aspect of TSL yet but when they do Trina will most certainly sport a much higher premium (PE) similar to that of SPWR.

  • Report this Comment On March 02, 2014, at 6:39 PM, stockbutterfly wrote:

    Travis the political crisis in Europe has to be good for solar in Europe. The only serious way to stop Russian aggression is to reduce oil and gas imports. It will be good for all renewables. I am long TSL,JASO,SPWR and CSIQ and won't be selling Monday morning as solar is part of the solution to the political crisis.

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