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Will Real Goods Solar (RGSE) Disappoint in Q1 Earnings?

Zacks Equity Research

Real Goods Solar, Inc. RGSE is expected to release first-quarter 2019 results soon. The company missed the Zacks Consensus Estimate in two of the trailing four quarters, the average negative surprise being 46.26%.

 

Let’s see how things are shaping up prior to this announcement.

 

Factors at Play

 

Following the receipt of the product certification for its POWERHOUSE 3.0 solar shingle system in November 2018 and the California Energy Commission’s approval to market the same in January 2019, Real Goods Solar started manufacturing and commercializing this system. Undoubtedly, the commercialization of this product will boost Real Goods Solar’s revenues in the first quarter of 2019. We may expect the upcoming quarterly results to reflect the same. 

 

Moreover, with legislation like the California 2020 Solar Mandate and a significant amount of written reservations from roofing companies, we expect the company to have secured ample orders and the upcoming results to subsequently reflect 

that.

 

In line with this, the Zacks Consensus Estimate for Real Goods Solar’s first-quarter revenues is pegged at $15.8 million, indicating a massive surge of 460.6% from the figure reported in the year-ago quarter.

 

On the flip side, the timing for the launch of POWERHOUSE didn’t turn out to be advantageous for Real Goods Solar. The company, which had previously expected to obtain the UL product certification in early 2018, ended up receiving the certification in November 2018. This in turn led to a significant delay in the commercialization of the POWERHOUSE solar shingles. 

 

This delay might have an unfavorable impact on the company’s bottom-line performance in the soon-to-be-reported quarter. Nevertheless, higher revenues generated from the sale of the POWERHOUSE shingles should boost the company’s quarterly earnings significantly. In line with this, the Zacks Consensus Estimate for Real Goods Solar’s first-quarter bottom line shows an improvement of 97.6%, when compared to the prior year quarter’s reported figure.

 

Earnings Whisper

 

Our proven model does not show a likely beat for Real Goods Solar this earnings season. That is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. This is not the case here.

 

Earnings ESP: Real Goods Solar has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

 

Zacks Rank: The company carries a Zacks Rank #3, which when combined with a 0.00% Earnings ESP makes earnings surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.

 

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
 

Real Goods Solar, Inc. Price and EPS Surprise


 

Real Goods Solar, Inc. Price and EPS Surprise | Real Goods Solar, Inc. Quote

A Stock to Consider

Here is a player from the Solar industry that has the right combination of elements to post an earnings beat this quarter.

SunPower Corporation SPWR has an Earnings ESP of +22.50% and a Zacks Rank #2. The company is scheduled to report first-quarter results on May 9. 

Recent Solar Releases

 

First Solar Inc. FSLR incurred a loss of 64 cents per share in first-quarter 2019, wider than the Zacks Consensus Estimate of a loss of 13 cents.

 

Enphase Energy ENPH reported first-quarter 2019 adjusted earnings of 8 cents per share against adjusted loss of a cent in the year-ago quarter.

 

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