What happened
Solar stocks have been under pressure in recent months for several reasons. After first-quarter earnings reports, however, the stocks of Enphase Energy (ENPH +2.76%), SolarEdge Technologies (SEDG +6.97%), and SunPower (SPWR +0.00%) reversed that downtrend this week. As of Friday morning, shares of Enphase, SolarEdge, and SunPower were up about 9.5%, 7%, and 6%, respectively, for the week, according to data provided by S&P Global Market Intelligence.
So what
Enphase began the parade of earnings reports last week with record quarterly revenue and strong cash flow from operations. SolarEdge and SunPower reports followed this week. SolarEdge also announced record revenue, which soared 62% over the prior-year period. SunPower also had strong sales, and it said it entered the second quarter with a record backlog after its customer base grew by 40% year over year.
Image source: Getty Images.
Now what
The good news from the first-quarter updates was welcomed by investors after a miserable performance from these stocks over the past six months. That's come in an environment of rising interest rates, supply chain disruptions, and inflation. Each of these metrics alone could have negative affects on the residential solar industry. Together, that backdrop has made investors nervous.
In Enphase Energy's first-quarter conference call for investors, its CEO, Badri Kothandaraman, addressed some of those headwinds. The company is trying to be proactive on the customer-facing installation portion of the business. Enphase has added field service technicians in both the U.S. and Europe to give installers on-site help.
NASDAQ: ENPH
Key Data Points
The company said demand remains strong and it has been able to keep up on the manufacturing side. Regarding the supply chain challenges that impact its production, Kothandaraman stated that "the global supply chain situation is still under stress, but our situation is stable due to supplier management and qualification of alternate suppliers." SolarEdge CEO Zvi Lando had similar comments in that the company is working hard to navigate supply chain challenges to be able to satisfy strong global demand.
Even in the face of a stock market in the midst of a sell-off this week, investors took those earnings report as positive developments. After these solar stocks had declined between 25% and 50% over the past six months, investors seemed to feel the businesses themselves warranted another look as investments.
