Blog Post

The Solar Shrug: Investors Blase About Earnings

With the President talking green in the White House Rose Garden, you might think that investors in solar stocks would be in a bullish mood this week.

But no. Rather than listen to what could happen between now and 2025, solar investors were taking a look at what has happened in the past three months. And they are not in any kind of mood to be disappointed.

On Thursday, SunPower (SPWR) saw its stock slide 13 percent, even though its revenue nearly doubled to $274 million in the first quarter. As the Journal’s David Gaffen pointed out, that topped even the most bullish analyst estimate. But it still wasn’t good enough for investors who wanted an even bigger blowout.

One analyst suggested there might have been confusion on guidance. SunPower said revenue next year would be “at least 40 percent” whereas it had previously said “between 40 percent to 50 percent.” Normally, that means a company is lowering guidance, but as Cowen’s Rob Stone noted,

“[The] 40 percent minimum is off a higher 2008 base so they are in fact guiding higher. And they also increased their production target.”

Later in the day, Evergreen Solar (ESLR) posted a loss, but one that was smaller than expected thanks to a surge in sales. Evergreen lost $25,000, which is a lot better than the $6 million loss a year ago.

But the company guided investors to its earnings in the current quarter, giving a range between $21.5 million and $22.5 million for revenue. The lower end of that range is below analysts estimates, causing the stock to tumble 4 percent in after-hours trading.

Both companies had good news to offer investors. But valuations and expectations alike have grown so high that it seems that for every investor willing to put new money into these companies there are more looking for an opportunity to cash out.