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Key Takeaways from SunPower's 3Q17 Earnings

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Part 5
Key Takeaways from SunPower's 3Q17 Earnings PART 5 OF 5

What to Expect from SunPower’s Future Earnings

SunPower’s guidance

SunPower (SPWR) revised its quarterly guidance in its latest filings. The company raised its 4Q17 non-GAAP (generally accepted accounting principles) revenue guidance from $320 million–$370 million to $800 million–$850 million.

What to Expect from SunPower&#8217;s Future Earnings

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This revision indicates that the significant portion of the fiscal 2017 revenue will be recognized in the final quarter of the year. SunPower anticipates higher gross margins in 3Q17 compared to 2Q17. The company raised its non-GAAP 4Q17 gross margin guidance to 13%–15%. For 4Q17, the company expects its EBITDA to be in the range of $75 million–$100 million.

SunPower revised its fiscal 2017 non-GAAP revenue from $2.1 billion–$2.3 billion to $2.1 billion–$2.15 billion. The operating cash flow is expected to be positive. The capital expenditure guidance was reduced from $110 million–$130 million to $100 million–$120 million.

Outlook

Over the years, solar panel prices have fallen while efficiency has improved multifold. In 2016, the cost of solar panel installation was $3.4 per watt, compared to $8.8 per watt in 2008. This decline has encouraged more companies and households to choose solar energy as their power source.

In the long run, the margins of upstream solar (TAN) companies such as Canadian Solar (CSIQ), First Solar (FSLR), and JA Solar (JASO) depend on the prices of fossil fuel and climate change reforms and regulations. According to Wall Street analysts, favorable reforms will have a positive impact on SunPower.

As per the ITC (US International Trade Commission), imported cheap solar products are harming US solar manufacturers. The ITC is seeking tariffs on imported solar products.

However, the SEIA (Solar Energy Industries Association) has warned of an increase in solar energy prices if penalties are implemented, which would lead to lower demand. Various companies and environmental groups also oppose the ITC’s proposed trade measures.

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