It has been a great time to be invested in the solar industry,
as the space has finally started to show some promise. Stocks
across the sector have been among the best performers as of late,
with several surging to new heights.
, SolarCity (
has been shining bright, and was actually
one of the three best performing stocks
with a market cap over $500 million during the month of October.
The stock appreciated by over 55% in the month alone, pushing its
year-to-date gain close to 400%.
Clearly, the stock has become an instant investor-favorite, and
with Elon Musk of
fame backing the company, few are willing to bet against SCTY right
now. But after some great earnings reports out of many of its
-- lately, the pressure will definitely be on SolarCity to post
some solid results after the bell on Wednesday and show that it has
earned at least a bit of its lofty valuation.
Solar City Earnings in Focus
According to our estimates
, SCTY is expected to lose 46 cents for the quarter. This is a bit
of a reduction from two months ago, as the analyst consensus stood
at a 43 cent loss then. However, it is worth noting that estimates
have trended a little higher lately, as the most accurate estimate
is slightly higher than the consensus, giving SolarCity an Earnings
ESP of 2.17%.
This positive ESP, when combined with the company's current Zacks
Rank #3 (Hold), suggests that the firm might be in for a modest
beat when it reports earnings. Furthermore, it is worth noting that
estimates for the current year and next year have also come down,
so a solid guidance reading would go a long way to reversing this
sluggish estimate trend.
Beyond the bottom line, investors will likely key in on some of
SolarCity's important operational metrics. Since the company
focuses heavily on its leasing system-in which customers can get
solar panels for free and pay monthly payments instead-megawatts of
solar energy systems deployed during the quarter looks to be very
For the previous quarter, this figure came in at 53 MW, which was a
huge boost from the year ago period which saw 31 MW deployed.
However, it is worth noting that there was a bit of a slide in the
gross margin on the leasing system segment, as this fell from 68% a
year ago, to 65% to end the last quarter. An end to this slide will
be important, though this is obviously still a very high gross
SCTY still has a pretty short history on the market, so there is
little investors can take away about a trend forming around
earnings season. Others in the sector have performed quite well
though, as guidance and earnings for many have come in ahead of
Thanks to this, and the incredible surge in SCTY's price so far
this year, investors probably have very high expectations for
SolarCity this earnings season.
The company may be able to squeak by with a beat-at least when
looking at Earnings ESP-but the real focus will have to be on the
firm's guidance and total megawatts deployed, as growth in this key
figure will definitely be necessary for SolarCity to maintain its
momentum heading into 2014.
Want more insights from Zacks? See our latest free report
5 Stocks to Double
Click here to receive this free report now
CANADIAN SOLAR (CSIQ): Free Stock Analysis
FIRST SOLAR INC (FSLR): Free Stock Analysis
SOLARCITY CORP (SCTY): Free Stock Analysis
TESLA MOTORS (TSLA): Free Stock Analysis Report
To read this article on Zacks.com click here.