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Guest Klothilde

First Solar (FSLR)

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4 hours ago, Klothilde said:

I originally thought they would be around $1 but on second thought I think Luz is right in that they'll probably miss because of low power plant sales in Q3.  I think $0.5-$0.75 could be it.  However I expect good news on the bookings and S6 metrics front so not sure how the market will react.

So maybe a miss but guidance is good? 
 

Thanks Klothilde! 

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7 hours ago, solarpete said:

Not a clue.  Been wondering the same thing all day.  SPWR was also hit hard, but there's no news that I'm aware of.  And volume was above average, which coupled with a big drop is never a good sign.  Can't imagine a leak of bad earnings, though, because they were sold out for the quarter.

If we bounce right back up tomorrow, it was some sort of algorithm-driven selloff.  If we don't, something's up--and I have no idea what that might be.

Thanks for the response solarpete. just thought I’d pick your brain on the matter. 

yeah, SPWR got slammed equally hard! Killed my call options by 50%! Painful day to say the least. SPWR has an investment of 6.2M shares in ENPH. I think that’s why they are tied so closely to price movement. Hope both will do well on their ER. 

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47 minutes ago, lepv123 said:

So maybe a miss but guidance is good? 
 

Thanks Klothilde! 

I’m kinda tired of the good guidance game. Feels like for 2 years all we’ve heard Q after Q is how S6 is gonna be amazing for profits and we need to be patient. And every Q it’s wait for the next Q because the tide is turning and this quarter is lumpy due to project recognition delay or S6 hiccups, etc etc. Time to put up or shut up, FSLR because bifacial is coming to eat your lunch. Not sure how much more slack and how many more $84 price targets can be given when they continue to underperform and make excuses while the rest of the industry is ready to pass them by again. Albeit in a profitless prosperity environment. 

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6 hours ago, Klothilde said:

Analyst consensus for 2020 EPS is $0.96, the high is $1.18

Looks like your estimate is 3 to 4 times higher than theirs.

What are they missing?

As I said, go to their message board, read the discussion by the technical posters.

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12 minutes ago, Klothilde said:

Thanks for the drama.

Now can anybody name a solar company with higher EPS  than FSLR in 2020?

Crickets...

That's IF they FINALLY perform as advertised.  As Mark points out, that hasn't been the case in the past.

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Solarpete and Klothilde, 

 

it seems like from what I’ve heard and read, I.e. from EIA, the next several years seem to be bright for solars? Is that your consensus too? Thanks 

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Short term (next 1 year) will be good for FSLR and ENPH, as both have a near-term competitive advantage (assuming FSLR executes as they anticipate).  Long term (beyond 1 year), ENPH will continue to prosper until a competitor emerges, but FSLR will fall back on a level playing field with the poly crowd as their price advantage erodes.  In 3-4 years, maybe sooner, subsidies should be gone world-wide, and solar will be cheaper than fossils world-wide.  Those companies that survive until then should finally have reached the Promised Land, with stable prices and continually growing demand.

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4 minutes ago, solarpete said:

Short term (next 1 year) will be good for FSLR and ENPH, as both have a near-term competitive advantage (assuming FSLR executes as they anticipate).  Long term (beyond 1 year), ENPH will continue to prosper until a competitor emerges, but FSLR will fall back on a level playing field with the poly crowd as their price advantage erodes.  In 3-4 years, maybe sooner, subsidies should be gone world-wide, and solar will be cheaper than fossils world-wide.  Those companies that survive until then should finally have reached the Promised Land, with stable prices and continually growing demand.

Thanks Klothilde and solarpete!  Wouldn’t it also be good for SPWR since it does similarly to what FSLR does, especially with what’s going on in California? 

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13 minutes ago, solarpete said:

Short term (next 1 year) will be good for FSLR and ENPH, as both have a near-term competitive advantage (assuming FSLR executes as they anticipate).  Long term (beyond 1 year), ENPH will continue to prosper until a competitor emerges, but FSLR will fall back on a level playing field with the poly crowd as their price advantage erodes.  In 3-4 years, maybe sooner, subsidies should be gone world-wide, and solar will be cheaper than fossils world-wide.  Those companies that survive until then should finally have reached the Promised Land, with stable prices and continually growing demand.

There are plenty to compete with enphase like sma and power-one. Top it off every AC module is a competitor. The fact is the market has been small relative to the rest of the inverter market. Now the micro inverter has grown and others are entering

 

https://en.m.wikipedia.org/wiki/Solar_micro-inverter

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2 hours ago, solarpete said:

As I said, go to their message board, read the discussion by the technical posters.

???

So I take it you cannot explain with your own words why the analysts are underestimating earnings big time.  And it seems you believe some of the anonymous posters on that board know much more about the inside scoop than the analysts covering the company.

Just a word of caution.  I've seen that message board and judging by the very high level of activity there in comparison to other solars it seems to me that there are people out there trying to create a hype around this company.  JMHO.

 

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3 hours ago, SCSolar said:

There are plenty to compete with enphase like sma and power-one. Top it off every AC module is a competitor. The fact is the market has been small relative to the rest of the inverter market. Now the micro inverter has grown and others are entering

 

https://en.m.wikipedia.org/wiki/Solar_micro-inverter

The North American market is dominated by ENPH and SEDG, and currently customers are switching from SEDG to ENPH.  ENPH's biggest problem is they can't satisfy all their demand, which is why they're expanding their supply line, which is why they're growing their earnings.  When you're expanding your capacity as fast as you can, and you're still having to turn customers away, competition is not your problem.

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2 hours ago, Klothilde said:

???

So I take it you cannot explain with your own words why the analysts are underestimating earnings big time.  And it seems you believe some of the anonymous posters on that board know much more about the inside scoop than the analysts covering the company.

Just a word of caution.  I've seen that message board and judging by the very high level of activity there in comparison to other solars it seems to me that there are people out there trying to create a hype around this company.  JMHO.

 

You take it wrong--but why would you want to take my word for it anyway?  Read the posts and make up your own mind.  I'm not trying to talk anyone into investing in ENPH--I'm pointing out that in my opinion, ENPH is the best-positioned solar manufacturer out there right now.  That may, of course, change in the future.  Do your own research.  I did, and ENPH has accounted for 60% of my profits so far this year, including recovering everything I lost from the LDK bankruptcy.  I'm certainly glad I ran across them!

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54 minutes ago, solarpete said:

The North American market is dominated by ENPH and SEDG, and currently customers are switching from SEDG to ENPH.  ENPH's biggest problem is they can't satisfy all their demand, which is why they're expanding their supply line, which is why they're growing their earnings.  When you're expanding your capacity as fast as you can, and you're still having to turn customers away, competition is not your problem.

The U.S. residential market is roughly 2.4GW a year and has been flat for the past 4 years with ups and downs according to an EIA report I just read.

https://www.seia.org/research-resources/solar-market-insight-report-2019-q3

 

From SEC fillings, Enphase  shipped over 1.2Million units in Q2 which was actually down from Q1 19. Looking at their inverters being on average 280W attached per, they are likely shipping 350MW a quarter. Their revenue based on regions suggests 75% in the U.S. and 25% international. That suggests 270MW a quarter run rate on inverters. That is a 45% market share in their target market segment.

 

https://www.sec.gov/ix?doc=/Archives/edgar/data/1463101/000146310119000129/a2019q210-qdoc.htm

 

While their products are now accepted, they are costly. The market itself in the US is growing 8% this year for home residential but is not overly robust. The upside will be limited for volumes in the U.S. with that level market share. 

 

Even if they can grow their shipments by 25% and maintain margins at 33% and the ASP at what looks to be around $104/unit they will only generate an added $0.26 in earnings. 4 quarters at($0.26+$0.08) is $0.34 a quarter which would project out to $1.34. That number is above high end 2020 estimates.

 

They have had a sudden rise in stock from near bankruptcy a few years ago as they turned to profits this year. The bulk of the sudden run up looks to have occurred. They  will have incremental growth but are going to have to compete internationally to get it and they are competing against the big boys that have entered the market and will compete. A double in a year could be possible, but I do not buy stocks with a $1-$1.30  with a 20+PE.

 

I am glad you made  back you losses from LDK, that was a disaster for many as has most long term solar investments. Remember FSLR used to be pushing 300, CSIQ was well over $40, JKS was in the mid 30's Jaso was over $20 at one point, ESLR is gone, SPWR was over $100 at one point.

 

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Good analysis, but based on their current tech.  What you're missing is their next generation of inverters (IQ8), which will be more capable AND have fewer components (which should make it both more reliable, thereby increasing customer demand vs. competitors, and less costly to manufacture, increasing margins).  Also, a recent headline shows they're starting to push into the commercial market, which is completely new for them (they've been strictly residential).  Finally, they're also looking to add a storage solution--but granted, so are many others.  Add all those factors into the mix, and I think those earnings projections are way low.

But I completely understand your caution.  To each his own.  And yes, buy-and-hold has been a complete disaster for solar investors, no matter what the name of the particular stock.

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1 hour ago, solarpete said:

Good analysis, but based on their current tech.  What you're missing is their next generation of inverters (IQ8), which will be more capable AND have fewer components (which should make it both more reliable, thereby increasing customer demand vs. competitors, and less costly to manufacture, increasing margins).  Also, a recent headline shows they're starting to push into the commercial market, which is completely new for them (they've been strictly residential).  Finally, they're also looking to add a storage solution--but granted, so are many others.  Add all those factors into the mix, and I think those earnings projections are way low.

But I completely understand your caution.  To each his own.  And yes, buy-and-hold has been a complete disaster for solar investors, no matter what the name of the particular stock.

I was wondering about storage with a Micro Inverter. Most storage is done as a DC solution. A micro inverter would be less efficient and lose power converting to AC or DC multiple times. That could be 3x less efficient than current solutions DC2AC in micr inverter, AC2DC to charge controller, DC2AC from battery to grid. .In the traditional sense  you get DC fed straight into the charge controller to charge the batteries, then the inverter takes the DC input from the battery to convert to AC. That is a single instance of charging.

 

As far as the next Gen,  do not compare current ASP to future ASP especially if you are entering a Commercial environment. Right now the cost of the micro inverter is expensive. At the retail install you are looking at 50 cents per watt compared to 15 cents or less for a string inverter for residential. You are looking at an added $1500-3000 cost  for the Enphase for a 7KV system. That is a 10% or more markup for using their inverters. They really only give benefits for shading issues. If shading is not an issue, string inverters are the way to go.

 

When you get to commercial, you start looking at 3 Phase Y systems and not just single phase 120/240V.  That is all new technology from their Micro Inverter and they will be entering against established vendors.  Enphase does not have the support organization or the track record that many customers will require to support multiple branch locations for the Commercial systems.  The entry into that market will be slow and take years to grow. Those other competitors are producing volumes and will protect their markets.

 

I am not saying it is a bad thing to try to do, but entering new markets costs dollars with new products. each new market segment has it's own requirements for service and support as well.  Those make for slow adoptions as products get certified for use by customers and a trial or 2 before acceptance and roll out.  Those segments  will drag down earnings from the core business.

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13 hours ago, solarpete said:

You take it wrong--but why would you want to take my word for it anyway?  Read the posts and make up your own mind.  I'm not trying to talk anyone into investing in ENPH--I'm pointing out that in my opinion, ENPH is the best-positioned solar manufacturer out there right now.  That may, of course, change in the future.  Do your own research.  I did, and ENPH has accounted for 60% of my profits so far this year, including recovering everything I lost from the LDK bankruptcy.  I'm certainly glad I ran across them!

I'm willing to endorse your ENPH price target of $80 if you help me pump FSLR with a price target of $300.  That would be at the same forward PE based on  2020 analyst consensus.

Deal?

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There are some other intangibles going for ENPH -- IQ8 will allow system to work during power outages without batteries.  Their complete Ensemble package with batteries will be a perfect answer for those in CA in the dark as we speak.  They make more power from efficiencies on the same panel than string inverters.  They have a far lower failure rates and warranty claims vs competitors.  Ease and speed of installation is also much better.  They just opened a plant in Mexico, eliminating the tariff concerns of Chinese manufacturing.  Their pricing is coming down, continuing to get closer to string setups.  Totally anecdotal, but installers of both systems rave about the ease and quality of ENPH systems.

I have done well as an investor on both SEDG and ENPH and have both systems on my roof.  ENPH is just better in every way -- even their monitoring app is superior.  They made a huge run from .76 to over $35 and have been pushed down to $23 with no negative news.  Earnings are next week and should beat.  Not sure about $80 any time soon, but they still only have a small slice of the market, but it is growing every quarter.

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So we've got 2 news items, the new plant opening and the DE Shaw name reveal (as if that matters).  We got 3 or 4 analysts pumps on the bi-facial news which of course did no good.  And we got Gordon suggesting that FSLR is saying they see some headwinds.  And we're at 56 bucks.

That seems like a seriously bearish recipe to me.  No?  So bearish its bullish?  This low volume, frightened Trump market has me nervous.  Still hoping to unload half my shares yet today.

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15 hours ago, SCSolar said:

If shading is not an issue, string inverters are the way to go.

I confess I'm not a technical expert here, but I'll say that on their message board, you will find posters who do not act like trolls, sound like they know what they're talking about, and strongly disagree with that statement.  They're convinced string inverters will eventually go away everywhere.

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7 hours ago, Klothilde said:

I'm willing to endorse your ENPH price target of $80 if you help me pump FSLR with a price target of $300.  That would be at the same forward PE based on  2020 analyst consensus.

Deal?

What is wrong with you????  For the THIRD time, I DO NOT BELIEVE THE CURRENT ANALYST CONSENSUS, based on the research I have done.  You are free to form your own conclusions.  But do not assign to ME the fallacious logic you display above.

Deal?

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1 hour ago, Mark said:

So we've got 2 news items, the new plant opening and the DE Shaw name reveal (as if that matters).  We got 3 or 4 analysts pumps on the bi-facial news which of course did no good.  And we got Gordon suggesting that FSLR is saying they see some headwinds.  And we're at 56 bucks.

That seems like a seriously bearish recipe to me.  No?  So bearish its bullish?  This low volume, frightened Trump market has me nervous.  Still hoping to unload half my shares yet today.

Why is that a bearish recipe?

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5 minutes ago, lepv123 said:

Why is that a bearish recipe?

Because there's been no project sale news this quarter that we were expecting.  

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18 minutes ago, Mark said:

Because there's been no project sale news this quarter that we were expecting.  

We don't know that. Last quarter the company unexpectedly announced the sale of the Cove Mountain projects and Muscle Shoals. The company also shipped 1.4GW of panels but only accounted for around 600MW in sales. Perhaps some of the missing 800MW will be accounted for this quarter. Earnings could be all over the place and are not indicative of how the company is performing.

The most important thing will be the updates regarding the factories. If yields improve from 91% to near 97% that would mean great things. And today's announcement seems to indicate the nameplate capacity has increased to 1.3GW due to the update mentioned last conference call.

Also, the company hinted that the SCE plant sales could be pushed into 2020. If that happens then current year guidance would be lowered a bit. So to sum up, earnings could be all over the map but I am guessing the analysts probably overestimated the quarter again. Regardless, though, the long term outlook will likely get rosier due to the increased throughput.

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Nasty headline, but some things to like here with GM raised a bit, OpEx down a bit, OpIncome up a bit.  So I guess will come down to the conference call and how good or bad Widmar does.

Q4 will be a monster apparently.

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