U.S. Markets close in 1 hr 18 mins

Solar ETF Shines on Biden's Potential Win and Solid Q3 Earnings

Sweta Killa
·4 min read

The solar industry has been on a solid ride in recent months. It is sizzling following various media sources that Joe Biden may have finally won the White House and is expected to become the next president of the United States.

Biden plans to pump $2 trillion into green energy over four years to build solar panels, charging stations and more; vows to rejoin the Paris climate in “exactly 77 days;” and aims for net-zero emissions by 2050. Additionally, a slew of better-than-expected earnings added to the industry’s strength.

As a result, Invesco Solar ETF TAN has soared nearly 10.5% in a week.

TAN in Focus

This ETF offers global exposure to the solar industry by tracking the MAC Global Solar Energy Index, holding 26 stocks in the basket. It is moderately concentrated on components with each making up for not more than 10.1% of the assets. American firms dominate with 45.2% of the the fund’s portfolio, followed by China (25.9%) and Germany (5.7%). The product has amassed $2.1 billion in its asset base and trades in a solid volume of around 1.7 million shares a day. It charges investors 71 bps in fees per year and has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: ETFs to Bet on Biden's Potential Presidential Victory).

We have highlighted earnings of some stocks that have led to soaring prices for TAN. Let’s take a look into the individual quarterly reports:

Solar Earnings in Focus

First Solar FSLR reported better-than-expected earnings. Earnings per share of $1.45 beat the Zacks Consensus Estimate of 60 cents and were well above the year-ago earnings of 35 cents. Revenues climbed 44.4% year over year to $928 million and edged past the estimate of $708 million. The stock occupies the fourth position with 7% of assets.

SolarEdge Technologies SEDG topped earnings but lagged revenue estimates. It posted earnings of $1.21 per share, surpassing than the Zacks Consensus Estimate of 82 cents and improving 24.7% from the year-ago earnings. Revenues dropped 17.7% year over year to $338.1 million and came in well below the consensus mark of $342 million. SolarEdge takes the second spot with 9% allocation (read: ETF Areas to Win/Lose With Biden on the Verge of Victory).

Enphase Energy ENPH reported adjusted earnings of 28 cents per share, which surpassed the Zacks Consensus Estimate of 14 cents but declined from the year-ago earnings of 23 cents. Revenues dropped 0.9% year over year to $179 million but edged past the consensus mark of $170 million. The company takes the top spot, accounting for 10.1% share in the fund’s basket.

SunPower Corp. SPWR posted a loss of 6 cents per share, narrower than the consensus estimate of a loss of 14 cents. The company reported adjusted earnings of 6 cents per share in the year-ago quarter. Revenues came in at $275 million, down 8.9% from the year-ago quarter and above the Zacks Consensus Estimate of $233 million. The stock occupies the ninth position with 4% share in TAN.

Sunrun RUN also topped estimates on both earnings and revenues. The company posted earnings per share of 28 cents on revenues of $209.8 million. Earnings per share beat the Zacks Consensus Estimate by 26 cents and improved from the year-ago earnings of 23 cents. Revenues of $210 million were above the consensus mark of $206 million but lower than the year-ago quarter of $215.5 billion. Sunrun is the sixth firm making up for 5.3% of TAN’s portfolio (see: all the Alternative Energy ETFs).

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
First Solar, Inc. (FSLR) : Free Stock Analysis Report
 
SunPower Corporation (SPWR) : Free Stock Analysis Report
 
Enphase Energy, Inc. (ENPH) : Free Stock Analysis Report
 
SolarEdge Technologies, Inc. (SEDG) : Free Stock Analysis Report
 
Invesco Solar ETF (TAN): ETF Research Reports
 
Sunrun Inc. (RUN) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research
 
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report