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SunPower (SPWR) Up 10.2% Since Last Earnings Report: Can It Continue?

Zacks Equity Research

A month has gone by since the last earnings report for SunPower (SPWR). Shares have added about 10.2% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is SunPower due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

SunPower Q1 Earnings & Revenues Surpass Estimates

SunPower Corp. incurred adjusted loss of 10 cents per share in first-quarter 2019, narrower than the Zacks Consensus Estimate of a loss of 21 cents. The company had incurred a loss of 41 cents per share a year ago.   

Excluding one-time adjustments, the company incurred a GAAP loss of a penny per share, narrower than the prior-year quarter’s loss of 63 cents.

Operational Results

During the quarter under review, SunPower’s adjusted revenues came in at $454.4 million, surpassing the Zacks Consensus Estimate of $442 million by 2.8%. Moreover, the top line improved 10.4% from the year-ago quarter’s $411.6 million. The year-over-year upside in revenues can be primarily attributed to higher sales of solar power systems, components and solar services.

Furthermore, total operating expenses in the quarter increased 2% to $82.9 million from that in the first quarter of 2019. Notably, higher research and development and sales, general and administrative expenses led to the increase.

Apart from these, SunPower made deployments of 580 megawatts (MW) in the first quarter compared with 455 MW deployed in first-quarter 2019, reflecting 27.5% year-over-year shipment growth. The company surpassed its expected range of 520-570 MW in the reported quarter.

Financial Position

SunPower had cash and cash equivalents of $205.4 million as of Mar 29, 2020, compared with $423 million as of Dec 29, 2019.

Long-term debt was $98.1 million as of Mar 29, 2020, compared with $113.8 million as of Dec 31, 2019.

In the first quarter, net cash outflow from operating activities totaled $179.5 million compared with the year-ago quarter’s $149 million.

Q2 Outlook

For second-quarter 2020, the company expects to generate adjusted revenues of $290-$330 million. Adjusted gross margin is estimated to be 0-6%. Additionally, it anticipates deployments of 340-400 MW in the same period.

How Have Estimates Been Moving Since Then?

Estimates revision followed a downward path over the past two months. The consensus estimate has shifted -182.99% due to these changes.

VGM Scores

At this time, SunPower has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

SunPower has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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