The third quarter of 2023 has brought a mixed bag for the solar industry, with some companies struggling while others show promise. Despite challenges like high-interest rates and reduced incentives, there are a few solar stocks worth keeping an eye on. Sunrun, SolarEdge Technologies, and SunPower are set to release their earnings on November 1, and here is what you need to know about these companies.
Factors Influencing Solar Stocks
One of the primary factors affecting solar stocks is the recovering supply chain post-COVID. As the market demand increases, the installation rates have surged. However, the high-interest rates in the US have led to a rise in financing costs, resulting in a slowdown in solar product shipments. For instance, Enphase Energy experienced a decline in solar battery and microinverter shipments, impacting its revenues. Additionally, reduced incentives for rooftop installations in California and lower utility rates in Europe have affected solar demand and international shipments.
Despite these challenges, some solar stocks have ramped up their manufacturing facilities and increased production rates, enhancing cost efficiency. Increased average selling prices have also contributed to the overall performance of the sector.
Solar Stocks to Watch
In the last quarter, Sunrun saw significant customer growth through its exclusive partnership with PG&E Corp, called Peak Power Rewards. However, a possible decline in solar energy capacity installation in California might impact its top line. Higher interest costs and inflationary pressures could also affect the company’s earnings.
According to the Zacks model, Sunrun currently has a positive Earnings ESP of +1,308.3% and a Zacks Rank #2, increasing the odds of an earnings beat.
In the previous quarter, SolarEdge Technologies delivered an earnings surprise. However, macroeconomic factors and the new net metering 3.0 regime in California may have dampened its revenues. Sales from the newly acquired Hark Systems are expected to contribute to overall margin performance. On the other hand, weak top-line and higher operating expenses might have impacted the company’s bottom line.
SolarEdge Technologies currently has a Zacks Rank #5 (Strong Sell) and a 0.00% Earnings ESP.
During the last quarter, SunPower experienced a negative earnings surprise. The consensus estimate for its third-quarter sales suggests a decline from the previous year, while the bottom-line estimate indicates a loss. SunPower currently has a positive Earnings ESP of +15.63% but carries a Zacks Rank #5.
The Oil-Energy sector as a whole is expected to see a decline in earnings and revenues compared to the same quarter last year.
It’s essential to keep an eye on these companies’ earnings to assess their performance and potential investment opportunities. Remember to consider various factors, including the overall market trends, when making investment decisions.
For more details on quarterly earnings releases and market insights, make sure to check out the Zacks Earnings Preview and the Zacks Investment Research page. It’s critical to stay updated on the latest recommendations and market trends for well-informed investing.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.