We are just two days away from the start of an exciting earnings season for solar, and I can barely contain my excitement. So, what should we be keeping our Foolish eyes on?
Kickoff in the U.S.
First Solar (Nasdaq: FSLR) reports results on Thursday, and analysts have been raising estimates all the way up to $1.94 per share on the quarter. That's a nice increase from $1.79 a year ago but not the kind of growth I'm going to write home about. What we really want to watch is cost per watt and gross margin, two metrics that are keys to staying ahead in solar. Last quarter, First Solar had gross margins of 48.4% and cost per watt of $0.76. Both lead the industry, and if it is going to stay ahead of more efficient panels, costs are going to have to keep falling.
Moving to China
Chinese manufacturers have to continue lowering cost per watt to keep up with First Solar. Crystalline silicon manufacturers have relied on falling silicon prices to become more competitive, but silicon doesn't have much further to fall, putting the onus on non-Si costs this quarter.
Trina Solar's (NYSE: TSL) earnings estimates for this quarter have nearly doubled over the last three months to $0.83 per share. Not bad for a stock trading at $27.50. At Yingli Green Energy (NYSE: YGE) analysts are expecting $0.30 per share, but analysts have been increasing estimates, so we could see a surprise on the upside.
Today, JA Solar (Nasdaq: JASO) gave us a little peak, increasing its shipment guidance for the third quarter to 410 MW from 375 MW. That's a whopping 31.8% increase from shipments in the second quarter. Could we see a blowout quarter from JA Solar?
And back home again
At both Sunpower (Nasdaq: SPWRA) and Evergreen Solar (Nasdaq: ESLR), we need to see not only demand for their products but also rapidly falling costs to stay competitive. At Evergreen in particular, management needs to prove that their cost reduction plans are taking effect for me to stay on this bandwagon.
Check back in on Friday for my take on how First Solar kicked off earnings season.
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