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Why Is SunPower (SPWR) Down 15.6% Since Last Earnings Report?

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A month has gone by since the last earnings report for SunPower (SPWR). Shares have lost about 15.6% in that time frame, underperforming the S&P 500.

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

SunPower Q4 Earnings Top Estimates, Revenues Miss

SunPower reported adjusted earnings of 14 cents per share in fourth-quarter 2020, surpassing the Zacks Consensus Estimate of 10 cents by 40%. The bottom line, however, declined 39% year over year from 23 cents.

For 2020, the company reported an adjusted loss of 7 cents per share, narrower than the Zacks Consensus Estimate of a loss of 22 cents. The company had incurred a loss of 14 cents per share in the prior year.

Operational Results

For the quarter under review, SunPower’s adjusted revenues came in at $341.8 million, lagging the Zacks Consensus Estimate of $356 million by 4%. Moreover, the top line declined 15.6% from $404.8 million in the year-ago quarter.

The reported figure was below the midpoint of the company’s expectation of $330-$370 million. The year-over-year downside can be primarily attributed to lower revenues from declining solar power systems and components sales and also from lower solar services sales.

For 2020, the company recorded adjusted revenues of $1.12 billion, lagging the Zacks Consensus Estimate of $1.29 billion by 13.2%. However, the top line improved 2.8% from last year’s $1.09 billion.

Total operating income in the quarter was $24 million compared with an operating income of $30.8 million reported in the year-ago quarter.

Total operating expenses amounted to $51.2 million during the fourth quarter compared with operating expenses of $55.3 million in the year-ago quarter.

Financial Position

SunPower had cash and cash equivalents of $232.8 million as of Jan 3, 2021, compared with $302 million as of Dec 29, 2019.

Long-term debt was $56.4 million as of Jan 3, 2021, compared with $112.3 million as of Dec 29, 2019.

In 2020, net cash outflow from operating activities totaled $187.4 million compared with cash outflow of $270.4 million in 2019.

Guidance

For first-quarter 2021, the company expects to generate adjusted revenues of $270-$330 million. The Zacks Consensus Estimate for first-quarter revenues is pegged at $343.5 million, higher than the company’s guided range.

Adjusted EBITDA is estimated to be in the range of $10-$20 million. Additionally, it anticipates deployment of 115-145MW in the same period.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.


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