On Apr 17, we have issued an updated research report on
). San Jose, CA-based solar firm continues to strengthen its
presence in the developed and emerging markets. SunPower is also
focusing on cost control initiatives. However, over-reliance on a
limited group of customers for revenue generation and increasing
competition in solar industry might challenge the company's
CANADIAN SOLAR (CSIQ): Free Stock Analysis
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RENESOLA LT-ADR (SOL): Free Stock Analysis
SUNPOWER CORP-A (SPWR): Free Stock Analysis
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SunPower, a Zacks Rank #2 (Buy) stock, reported favorable results
in fourth-quarter 2013. Quarterly earnings and revenues surpassed
the Zacks Consensus Estimate. On a year-over-year basis, top and
bottom line improved primarily on the back of strong demand for
its unique, cost effective, high efficiency products in utility,
commercial and residential projects.
SunPower provides solar systems to the customers in North
America, Europe, the Middle East and Asia. In fourth-quarter
2013, the company has completed several vital projects, including
the final phase of the California Valley Solar Ranch photovoltaic
generating facility in San Luis Obispo County, CA. Currently,
SunPower plans to enter England, Greece, Israel and Malta. We
believe solidifying presence in developed markets besides
expanding operations in new locations will enable the company to
diversify its revenue stream.
We appreciate SunPower's steady cost-curtailment initiatives. The
company's total operating expenses and cost of revenues decreased
in 2013. SunPower is currently utilizing sophisticated
manufacturing techniques to lower manufacturing costs and improve
solar cell efficiency. These initiatives will enable the company
to improve margins.
SunPower maintains a stable cash position and cash flow through
operating activities. The company had a cash balance of $762.5
million as of Dec 29, 2013, and operating cash flow of $162.4
million in 2013. A steady financial profile supports SunPower's
expansion activities and introduction of modern manufacturing
However, we are concerned about SunPower's over-dependence on a
limited number of customers for revenue generation. A major part
of the company's revenue primarily depends on large ventures. In
2013, the company gathered 42% of its total revenue from two
major projects. This may lead to project-specific risk in the
Key Picks from the Sector
Other stocks worth considering in the solar industry include
Canadian Solar Inc.
JinkoSolar Holding Co., Ltd.
). While Canadian Solar holds a Zacks Rank #1 (Strong Buy),
ReneSola and JinkoSolar carry a Zacks Rank #2 (Buy).