What happened

Reporting third-quarter earnings yesterday after the market closed, Array Technologies (NASDAQ:ARRY) came up short of analysts' expectations for revenue and earnings per share (EPS) of $203.5 million and negative $0.05, respectively. Instead, Array reported sales of $192.1 million and a loss per share of $0.07. Investors don't seem to care too much, evidently; as of 11:16 a.m. EST today, shares are up 13.5%.

Despite the revenue and earnings misses, there were several bright spots in the earnings report as well as some favorable attention from Wall Street that are leading investors to warm up to this solar-tracking technology stock today.

Engineers installing solar panels in a field.

Image source: Getty Images.

So what

Although sales were less than expected last quarter, investors seem to be placing greater weight on what lies ahead. Array ended the third quarter with a company-record $1 billion in executed contracts and awarded orders. But it's not merely the size of the company's order book that has investors smiling. According to management, the $1 billion in contracts and orders reflects gross margins at or above those that the company has reported previously. Thus, management forecasts that gross margin will steadily rise from the 4.8% that it reported in the third quarter of 2021 to the "high teens to low twenties" in the second half of 2022.

Analysts are finding the company's prospects inspiring as well. This morning, Maheep Mandloi, an analyst at Credit Suisse, raised the price target on Array's stock to $30 from $27 while keeping an outperform rating, according to Streetinsider.com. Jon Windham, an analyst at UBS, is also more bullish on the stock, hiking his price target to $27 from $25 and maintaining a buy rating.

Now what

While the company's growing backlog is a positive sign, solar investors will want to ensure that Array continues to report new orders and contracts, ensuring future growth is strong. Likewise, it will be worth watching if the company succeeds in expanding its gross margin over the coming quarter as management forecasts.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.