, one of the leading U.S. solar installers, has been shining bright
since its IPO last December and was one of the
three best performers
of last month. The stock had skyrocketed nearly 400% in the
year-to-date time frame, leading the surge in the solar space
followed by First Solar (
) and Sunpower (
However, this run-up in SCTY shares seems to have hit the brakes.
Although this market favorite reported a loss that was narrower
than expected, a weak fourth quarter guidance dampened investor
Solar ETFs Stay White Hot, What's Behind the
Solar City Results in Focus
Solar City surpassed our estimate on both the bottom and top lines.
The adjusted loss per share came in at 43 cents versus the Zacks
Consensus Estimate of a loss of 46 cents. Revenues climbed 52% year
over year to $48.6 million and surpassed our estimate of $42
Robust performances were credited to new energy contracts, a huge
level of panel installations, and record lease revenues. The
company installed a record 78 megawatts (MW) during the quarter,
bolstered by a 151% year-over-year increase in residential demand
Inside the Incredible Surge in Solar ETFs
Solar City nevertheless provided weak guidance for the fourth
quarter. The company projects adjusted loss per share of 55-65
cents, much wider than the Zacks Consensus Estimate of a loss of 49
cents. In addition, SCTY expects to install 101 MW of new solar
panels and thus reiterated its full-year guidance of 278 MW in
The discouraging guidance took a toll on SCTY shares, which fell
nearly 10% in after-market trade yesterday, while shares were down
13% in trading on Thursday. This is indicative of investor caution
on the company's growth story and the call for locking in some
gains at the current level.
Further, Solar City currently has a Zacks Rank #3 (Hold) for the
short term, suggesting that the bullish trend might come to a
standstill for the time being.
A couple of ETFs having heavy exposure to this solar company is
enjoying huge gains of late and emerged winners in the year-to-date
time frame. With SCTY's disappointing fourth quarter guidance and
the large drop in its after-market share prices, this trend is less
likely to continue.
Below, we have highlighted two solar ETFs having larger allocations
to SCTY and will be in focus in the coming days (read:
all the Alternative Energy ETFs
Guggenheim Solar ETF (
This ETF emerged as a strong winner in the global space this year
on good volumes of nearly 367,000 shares a day. The fund has
amassed $347.9 million in assets so far and charges investors 70
bps in fees per year.
The product tracks the MAC Global Solar Energy Index, holding 31
stocks in the basket. Of these firms, SCTY takes the second spot,
making up 5.97% of assets. Chinese firms dominate the fund's
portfolio with nearly 37%, closely followed by U.S. (31.30%) and
Hong Kong (12.26%).
The fund surged nearly 141% year-to-date and has a Zacks ETF Rank
of 2 or 'Buy' rating, suggesting that the product may outperform
over the next one-year period (read:
3 Sector ETFs Crushing the Market in 2013
Market Vectors Solar Energy ETF (
This fund manages a $21.2 million asset base and provides global
exposure to a small basket of 33 solar stocks by tracking the
Market Vectors Global Solar Energy Index. Here, SCTY occupies the
sixth position in the basket with 5.04% of total assets.
In terms of country exposure, U.S. firms take roughly one-third of
the portfolio, closely followed by China (26.5%) and Taiwan
(18.6%). The product has an expense ratio of 0.66% and sees paltry
volume of under 6,000 shares a day. The ETF added nearly 10.5% in
the year-to-date time frame.
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FIRST SOLAR INC (FSLR): Free Stock Analysis
MKT VEC SOLAR (KWT): ETF Research Reports
SOLARCITY CORP (SCTY): Free Stock Analysis
SUNPOWER CORP-A (SPWR): Free Stock Analysis
GUGG-SOLAR (TAN): ETF Research Reports
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