Avg. 2.25B over 3 years = 750M/yr
Per Qtr = 188M
188M at 15% margin = 28M/qtr earnings
120 mil shares out = .23 cents/shr/qtr
More importantly, this contract will allow SPWR to better know their
production demand and raise their plants capacity utilization accordingly,
adding to earnings going forward assuming panel prices remain flat to moderately down.
Add in the Inner Mongolia EPC contract @ 400M/yr or .60 and earnings should be looking good for 2014 at around $1.50 + capacity utilization efficiencies.
I would guesstimate that they could easily earn $2.00/share in 2014.
No where in the order does it talk about margins...Buffet would NEVER allow such margins on an order that size...
Profitable???? Solar is the least profit potential in the energy grid everyone knows it!!
This co will file bankruptcy before they even come close to your absurd numbers, then buffet may make a run for them in bankruptcy....watch....
15% is gross margin and not Operating Income.
SPWR has 15% gross margin and 14-16% SG&A which makes break-even to 1% at best.
Size of this contract would be low teens gross margin.
SPWR doesn't look like a lean organization at least at the top.
This contract along with Toshiba, Sharp makes SunPower drive down cost more aggressively.
SPWR needs to get their gross margin to 20%+ while reduce the SG&A by couple of points. Then we would start seeing real money.
I hold 5K shares that I plan to hold for 5 more years.