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Sunworks (SUNW) to Post Q2 Earnings: What's in the Offing?

Zacks Equity Research

Sunworks, Inc. SUNW is set to report second-quarter 2019 results on Aug 2, before the market opens.

In the last reported quarter, the company reported a negative earnings surprise of 466.67%. Moreover, earnings missed the Zacks Consensus Estimate in two of the last four quarters, the average negative surprise being 116.67%.

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

Factors at Play

In second-quarter 2019, the company signed some notable contracts like an engineering, procurement and construction deal, worth $2.3 million, to develop a 1.0 MW solar parking canopy project for a Northern California School District. It also clinched a new 751 kW solar power construction project, worth $1.3 million, for Plumas Mutual Water District. These acquisitions are likely to boost the company’s backlog, which will be duly reflected in the upcoming results.

In fact, the company witnesses such a smooth flow of contracts each quarter, which, in turn, boosts its top line. We expect it to experience a similar trend for the soon-to-be-reported results as well.  

Interestingly, the state of California witnessed high precipitation levels during most of the second quarter. Similar to the first quarter, this might have hindered installation activities for many of the larger ACI and Public Works projects, which, in turn, might have an unfavourable impact on its top line in the upcoming quarterly result.

In line with the abovementioned factors, the Zacks Consensus Estimate for Sunworks’ second-quarter revenues is currently pegged at $19 million, reflecting a 5% decline from year-ago quarter’s reported number.

Sunworks has been witnessing a declining trend in its operating expenses for the past couple of years now. As the company continues with its efforts to reduce operating expenses, we anticipate the trend to continue in the soon-to-be-reported quarter as well. This will have a favourable impact on Sunworks’ June-end quarter bottom-line performance.

In line with this, for the second quarter, the Zacks Consensus Estimate is pegged at break- even earnings, reflecting a notable improvement from the year-ago quarter’s reported loss.

Earnings Whisper

Our proven model does not show a likely beat for Sunworks 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: Sunworks 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 currently 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.

Sunworks, Inc. Price and EPS Surprise

Sunworks, Inc. Price and EPS Surprise

Sunworks, Inc. price-eps-surprise | Sunworks, Inc. Quote

Upcoming Solar Releases

SolarEdge Technologies SEDG is slated to release second-quarter 2019 results on Aug 6.

Sunrun Inc. RUN is scheduled to report quarterly numbers on Aug 7.

A Recent Solar Release

SunPower Corp. SPWR incurred adjusted loss of 22 cents per share in the second quarter, wider than the Zacks Consensus Estimate of a loss of 9 cents. The company had incurred a loss of a penny per share, in the year-ago quarter.

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