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SunPower (SPWR)

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Guest chrisceeaustin

SCTY is trading at 25 times their sales. SPWR is trading at less than 1. Even Raymond James cannot convince traders that this is a bubble. How low do you think SCTY will go over the next three months?

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Guest ILOVEPV

How low do you think SCTY will go over the next three months?

probably to $60-70 where I will sell remaining 25%.

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Guest chrisceeaustin

Any thoughts on likelihood that the debt will be converted to shares. Possible 12 million shares total.

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Guest spiritcraft

I hope it goes to $120...  and then we can bitch and moan about being half of the value on say CSIQ (and others).

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Guest iwcwatch

Buy on rumors, sell on news. However, how does the SPWR pull the sector down with such nice figures? Whats wrong with my interruption to the result? :(

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Guest singular

Definite headfake in my opinion. Foolish to have panicked and sold SPWR at 24 just now.

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, how does the SPWR pull the sector down with such nice figures?

 

Did guidance fall short? That is what I read somewhere I do not follow closely, but the numbers where great. 

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Did guidance fall short? That is what I read somewhere I do not follow closely, but the numbers where great. 

Yes, forward revenues were significantly lower than WS projections.

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Guest sc_solar

Smashed EPS, q3 revenue lower than Wall street....full year Rev unchanged. Full year guidance EPS up 1.00-1.30 from their own guidance of .60-.80 in May. I think this is some tree shaking be above 28 again fairly quickly (2-3 weeks?) IMO.

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Guest solar123

No big deal, lots of short covering manipulated by HFT.

 

Might be green by the end of the day.

 

The EPS should have sent it up 10% this morn, yet the "disappointing" revenue gave the shorts the strength to shake the weak hands out.

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Guest solar123

Or, maybe not...

 

9% of 10% of my portfolio is not going to kill me, yet I don't have to like it! 

 

I don't want to miss the TSL jump, so will have to take a loss and move it back soon.

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Guest CrouchingTiger

I was quite concerned with the after-hour action of SPWR yesterday as there are substantial gains for the whole sector in a short time. In the old days, the whole sector could have been dragged down quickly. You never know. But I am a bit surprised to find that CN ones are holding well, especially SOL, which I sold some after hours yesterday just in case. About the report, I think it is a really good news for CN solars because SPWR is at full utilization and would like to add more capacity if possible. That says market demand is strong. The miss of revenue guidance is from European market while U.S., Asia and the rest of the world is strong.

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http://www.streetinsider.com/Analyst+Comments/SunPower+(SPWR)+Valuation+Already+Reflects+Positives,+Says+Goldman+Sachs/8557689.html

 

"That said, the stock’s outsized gains YTD suggests a lot of positives are already priced in, and we believe a premium valuation vs. peers, combined with a declining earnings growth cadence through 2H13 (vs. 2H-weighted for peers) would suggest headwinds to further upside."

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http://news.investors.com/technology/102913-677035-sunpower-third-quarter-earnings-preview.htm?ven=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:%20InternetTechnologyRss%20(Technology%20RSS)

 

SunPower (SPWR) on Wednesday is expected to post a big jump in Q3 earnings, helped by stable pricing for solar modules and steady demand for green technology.
 
The company is expected to post earnings per share minus items of 25 cents, according to the consensus estimate of analysts polled by Thomson Reuters. That compares with EPS of just 3 cents in the year-earlier quarter. But revenue is expected to fall 10% to $583.2 million.
 
First Solar (FSLR), the largest company by market in IBD's Energy-Solar industry group, which ranks No. 1 out of 197 groups tracked, is set to report its latest results after the close Thursday.
 

 

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Guest sleepyhead

I am a big fan of SPWR and it is one of my two biggest holdings. The company has success written all over it.

 

The only thing that will matter on the conference call is "will there be growth". They said on last CC that they might have an answer on additional capacity on this CC. Let's hope they don't fumble on that question like they did last time.

 

If they can find a way to expand capacity, then watch out $10b market cap.

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Guest sleepyhead

explo, quite honestly I don't dive as deep into the granular data as some of you guys do on this forum. I wish I had the time to do that, but I rather spend my time reading as much articles as possible and that is how I develop my investment thesis on companies. I listen to CC and read all of the official information that companies give, but SPWR presents data a little bit different than the CN solars do.

 

The short answer to your question is yes, they do make money on panels and I think that they make a lot higher margins than all of the CN solars; maybe JKS is able to compete with them. SPWR would like to build projects in Japan, but in that market the Japanese like to use their own EPC firms so they only buy the panels from SPWR. SPWR had 16.6% and 18.2% gross margin in Asia Pacific over the last two quarters, so I assume that the vast majority is module sales.

 

They signed partnership agreements to supply panels for Toshiba as well as a new agreement to be an OEM panel maker for Sharp. From what I gathered it looks to me like they locked in an ASP with Toshiba and maybe even sharp, and they plan on expanding margins through cost cutting. In their analys day presentation they said that they will cut production costs of X-series panels by 35%, while raising efficiency from 21.5% to 23%, all by 2015. If they can really do this, then their already high margins will be huge. I have also read that their x-series panels are holding up really good in real world conditions and they are producing more watts than expected.

 

SPWR has so many projects and residential and commercial rooftop installations that they don't need to just sell panels. They say that the residual value on their residential lease is $1.75/W vs. $1.27 for SCTY.

 

My friend who is an independent residential solar installer says that the lead times on SPWR panels are crazy long. He has to wait 6 months to get them. SPWR said on last CC that they are sold out for the next 18 months, or at least that is how I interpret "will be running at full capacity for next 18 months."

 

Sunpower went from a solar company to an "energy" company a few months ago. I think that they have the right technology, business plan, and strong balance sheet to be a major force in the energy industry.

 

If I was in charge of SunPower, I would be expanding capacity as fast as possible. CEO Tom Werner had this to say on last CC when asked about capacity expansion:

 

We're in the process of looking at options which would include expansion of our EU JV, organic expansion and a number of other options. We're not to a solution yet. Perhaps in the time frame, in the next call, we will be, but yes, absolutely.

 

I am looking for an answer today.

 

SPWR's financials are a black box due to their complex revenue recognition principles; but I wouldn't be surprised to see them crush analyst expactions of $0.25 EPS as they always do.

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Guest sleepyhead

My investment thesis on SPWR is pretty simple:

 

- Best panels in the market, with lowest degradation and best warranty (because they don't fail anywhere near as much as others). Probably will have longest life span, way past 25 years that is warrantied.

-Production costs to go down 35%, while efficiency improves 10%. Huge GM benefit.

-Already looking at $200m positive cash flow in 2013. Will lead to investment in capacity expansion.

-Big project backlog that is growing. New 200 MW project in Chile, where it's parent Total S.A. actually took a 20% equity ownership stake. This plant is built without subsidies, without any PPA agreement, no nothing. The energy produced will be sold to the grid and will be cheaper than conventional sources of energy.

-Residential leases are growing like crazy. They can't get enough financing but from what I am reading a lot of banks are starting to throw money at solar companies.

-Second? best balance sheet after FSLR.

-EPS growing every quarter.

-2014 FY estimates look way too low to me, and analysts will start playing catch up if SPWR has a huge Q3, that I am hoping for (but this is just a guess, since I have not looked at numbers). If a company is sold out with improving conditions in the industry, then management would really have to be incompetent to not make money in this environment with a great product like SunPower panels.

 

I use logic and common sense in my investment decisions. Logic tells me that SPWR results have to be great. I cannot come up with any scenario where their business starts struggling. When I invest money I try to envision the future and go where the puck is going to be and not where it has been.

 

SPWR sounds like a big winner to me, but this is almost exclusively based on qualitative research and gut feeling.

 

Remember that even if their results are great, there is no telling how the market will react. After their great results post Q2, SPWR tanked 13% the next day and 25% over the five day period immediately following results. Since then it is up 70% on basically no new news, except for 200MW Chile announcement and about 100MW japan module shipment. But the news stories did not seem to move the stock up at all when they came out IIRC.

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Yes, they have good GM but net income is always a lot lower than one would hope. I hope this time around they make a big splash to positive. they are being sold off, but the Chinese are taking bigger dips. 

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Guest sleepyhead

I could be wrong, because from what I understand their revenue and EPS can swing wildly from one quarter to the next depending on how their monster power plant construction milestones are reached. As these certain milestones are reached revenue gets recognized. Kind of like with CSIQ and its power plant sales, only that SPWR recognizes revenue in chunks instead of all at once. They are also wrapping up their big CVSP project (multi-hundred MW) right about now, so I don't know if 2014 numbers will be hurt because of this.

 

That is why it is impossible to estimate what their results will be.

 

I hope that SPWR crushes it for everyone's sake here. If they have great results and give great guidance then all solar stocks will rally tomorrow. If they are struggling then the CN solars will not rally either.

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