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SunPower’s Earnings: Why Q2 Looks Gloomy

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  • SunPower’s second-quarter earnings are expected on July 31.
  • Analysts expect the company’s loss to widen in the second quarter compared to the second quarter of 2018.

Analysts expect SunPower (SPWR) to have poor earnings in the second quarter. SunPower’s second-quarter earnings are expected on July 31. SunPower’s lower second-quarter numbers might discourage investors. Strong solar power demand this year indicates a healthy performance.

SunPower stock has fallen in ten of the last 11 trading sessions. After a steep rise late in June, the stock has fallen more than 17% in the last two weeks. Currently, the stock is trading in the oversold zone.

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SunPower’s earnings drivers

Based on analysts’ estimates, SunPower will report a loss of $0.15 per share for the quarter ending June 30. In the same quarter last year, the company reported a loss of $0.01 per share. In the first quarter, SunPower reported a loss of $0.41 per share. After experiencing losses for several quarters, SunPower will likely break even later this year, according to estimates.

SunPower’s shift from utility-scale to distributed generation in residential and commercial solar will likely improve its financial performance. The transition and launching the A-series solar panels could bode well for earnings stability. The A-series solar panels offer an approximately 400-watt capacity, which is higher than most residential solar panels. The solar panels are also cost and space-efficient.

SunPower will likely report total revenues of $452.0 million for the second quarter. The estimate represents flattish growth compared to the same period last year. In the first quarter, SunPower reported revenues of $412.0 million. Gloomy revenue growth could be disheartening for investors. Wood Mackenzie estimated stronger demand for solar power this year.

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SunPower stock leads the pack

Along with the top-line growth, SunPower’s earnings commentary will likely drive the stock in the short term. Recently, solar panel installations increased in the US due to states pushing for renewable energy, lower costs, and higher corporate investments. Solar stocks have been strong this year despite trade tensions or whether there’s support for fossil fuels. So far, SunPower stock has more than doubled this year. The Invesco Solar ETF has risen about 54%.

Analysts seem cautious to negative on SunPower stock. They have given a mean target price of $8.06, which suggests a potential downside of almost 22% for the next 12 months. Currently, SunPower is trading at $10.3. Among the 11 analysts tracking the company, six recommended a “hold,” two recommended a “buy,” and three recommended a “sell.”

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