4 Renewable Energy Stocks Set to Beat Q1 Earnings Estimates
Renewable energy stocks’ first-quarter results are expected to reflect solid installation activities as well as an increase in their products’ shipment. This is due to the recent strong demand witnessed in clean energy space, along with benefits offered by the Inflation Reduction Act (IRA) of 2022.
A handful of such renewable energy stocks, particularly solar and alternative energy companies, which are part of the broader Zacks Oil-Energy sector, are set to release their Q1 numbers soon.
Renewable energy stocks like Clearway Energy CWEN, Fluence Energy FLNC, Gevo, Inc. GEVO and Ormat Technologies ORA are likely to beat estimates this time around.
Here’s What to Expect
Per a report from the U.S. Energy Information Administration (EIA), published in March 2023, renewable generation surpassed nuclear generation for the first time in 2021 and continued to provide more electricity than the latter in 2022. Notably, the combined wind and solar share of total generation increased from 12% in 2021 to 14% in 2022.
With solar and wind energy constituting a major portion of renewable energy expansion, the aforementioned capacity enhancement is expected to get reflected in the companies’ first-quarter results.
As an evidence, Enphase Energy ENPH, a prominent solar stock, witnessed solid 64.5% year-over-year growth in its first-quarter revenues, backed by solid shipment of its microinverters and batteries. Its bottom line also improved a solid 73.4%. The trend is expected to get reflected in the results of other clean energy stocks as well.
Notably, factors like declining capital costs for solar panels, wind turbines and battery storage, as well as government subsidies such as those included in the IRA, are likely to have contributed to clean energy stocks’ quarterly performance.
Thanks to the economic recovery observed over the past few quarters, there has been an upward trend in installation activities for clean energy stocks. This trend is expected to have driven demand in the to-be-reported quarter as well.
Also, growing hydropower generation has been driving revenues and earnings of clean energy stocks. In particular, hydropower production in the western United States increased 13% to reach 161 million megawatt-hours (MWh) in 2022, as stated by EIA in a February 2023 report.
Considering all the aforementioned factors and data, both earnings and revenues of the broader market are expected to improve from the prior-year quarter’s numbers.
However, higher logistics costs and borrowing costs as a result of global supply-chain pricing pressure and higher interest rates may have some impact on the clean energy companies’ overall performance.
Q1 Projections
Per the latest Earnings Preview, first-quarter earnings of the Oil-Energy sector are expected to improve a solid 6.7%, while revenues are likely to decline 6.6%.
Zacks Methodology
Given the high degree of diversity in the clean energy space, finding the right stocks with the potential to beat estimates might be quite a daunting task. However, our proprietary Zacks methodology makes this fairly simple.
We are focusing on stocks that have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).
Our research shows that for stocks with this combination, the chances of an earnings surprise are as high as 70%.
Earnings ESP provides the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Our Choices
Below we present four stocks that are expected to come up with an earning beat this reporting cycle.
Clearway Energy: It owns, operates and acquires renewable and conventional generation and thermal infrastructure projects. In January 2023, the company started commercial operation at its 36-megawatt (MW) solar farm with 144 MWh of battery storage, located in Central O‘ahu. The site, with clean electricity generation capacity to power more than 7,600 homes each year, should add an impetus to CWEN’s first-quarter revenues.
The company, with an Earnings ESP of +2.04% and a Zacks Rank #3, is slated to release earnings on May 4. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CWEN’s sales indicates a solid improvement of 17.5% from the year-ago quarter’s reported figure.
Clearway Energy, Inc. Price and EPS Surprise
Clearway Energy, Inc. price-eps-surprise | Clearway Energy, Inc. Quote
Gevo: It is a renewable chemicals and advanced biofuels company engaged in the development of biobased alternatives to petroleum-based products using a combination of synthetic biology and chemistry. In January 2023, GEVO announced some project updates related to the development, financing and construction of NZ1 as well as subsequent Net-Zero plants. We expect its upcoming results to reflect further developments.
The company, with an Earnings ESP of +45.46% and a Zacks Rank #3, is slated to release first-quarter earnings on May 10. The Zacks Consensus Estimate for GEVO’s sales indicates a solid improvement of 889.1% from the year-ago quarter’s figure.
Gevo, Inc. Price and EPS Surprise
Gevo, Inc. price-eps-surprise | Gevo, Inc. Quote
Fluence Energy: It provides energy storage products and services, and digital applications for renewables and storage. In February 2023, the company announced that its Asset Performance Management software, Nispera, has expanded to provide real-time performance monitoring, AI-enabled performance analysis and optimization of energy storage assets. FLNC also stated that it is currently operational on five energy storage assets totaling 267 MW/948 MWh globally. This might have added more customers to the company’s database, thereby boosting its revenues.
Fluence Energy, with an Earnings ESP of +20.00% and a Zacks Rank #3, is expected to release first-quarter earnings soon. The Zacks Consensus Estimate for FLNC’s sales indicates a solid 21.8% improvement from that recorded in the year-ago quarter.
Fluence Energy, Inc. Price and EPS Surprise
Fluence Energy, Inc. price-eps-surprise | Fluence Energy, Inc. Quote
Ormat: It is the only vertically integrated company that is primarily engaged in the geothermal and recovered energy generation business. In January 2023, Ormat Technologies and PT Medco Power Indonesia, through their subsidiary, PT Medco Cahaya Geothermal, signed a financing agreement with PT Sarana Multi Infrastruktur for the development of Ijen Geothermal Power Plant. We expect ORA’s first-quarter results to give further insights on the development of this power plant.
The company, with an Earnings ESP of +4.62% and a Zacks Rank #3, is slated to release earnings on May 9. The Zacks Consensus Estimate for ORA’s sales indicates a solid 15.6% improvement from that recorded in the year-ago quarter.
Ormat Technologies, Inc. Price and EPS Surprise
Ormat Technologies, Inc. price-eps-surprise | Ormat Technologies, Inc. Quote
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Enphase Energy, Inc. (ENPH) : Free Stock Analysis Report
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Fluence Energy, Inc. (FLNC) : Free Stock Analysis Report
