Well, I was wrong. Solarfun Power (Nasdaq: SOLF ) wasn't the last solar company to report. And in this case, I can say "last but not least," since Energy Conversion Devices (Nasdaq: ENER ) had quite a strong outing.
ECD has been around a long time, and it's drummed up Foolish enthusiasm on occasion. This year, the company is finally rewarding true believers. Shares have more than doubled, even as most solar players are roughly breakeven at best.
United Solar Ovonic, the subsidiary we're most interested in, is a leader in the thin-film business through its UNI-SOLAR product offering. These lightweight, flexible laminates are very well-suited to the emerging building-integrated solar materials market. Like First Solar's (Nasdaq: FSLR ) thin-film offerings, they're less efficient than traditional photovoltaic cells, but relatively cheap and require no polysilicon.
In the longer term, traditional photovoltaic players may have their day as solar-grade silicon becomes more abundant. But for now, there's a gaping contrast in gross margins. Whereas SunPower (Nasdaq: SPWR ) mustered a 24% gross margin in its most recent quarter, and Yingli Green Energy (NYSE: YGE ) managed a relatively gleeful 26%, United Solar Ovonic cranked out 34%.
The growth figures here are pretty heroic, but this business is growing from a tiny base. Production was a mere 26 megawatts in the quarter. JA Solar (Nasdaq: JASO ) , which has a comparable $3 billion market capitalization, produced 66 megawatts in the same period. Still, the fact that ECD is already generating positive operating cash flow at this early stage is very encouraging.
The biggest issue here, as with First Solar, has to be valuation. In fairness, I haven't begun to think about what a fair price for this business might look like, but I wouldn't call the stock neglected by any means.
Energy Conversion Devices sports a middling three-star ranking in Motley Fool CAPS. Think the thin-film player's got fat profits in the pipeline? Weigh in with your own rating right here.
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