8point3 Energy (CAFD) Q4 Earnings: Is a Beat in the Cards?

8point3 Energy Partners LPCAFD is slated to report fourth-quarter fiscal 2016 results on Jan 26. Last quarter, the partnership had posted a negative earnings surprise of 9.52%. However, the partnership outperformed the Zacks Consensus Estimate in two out of the trailing four quarters, the average positive surprise being 966.06%.

8point3 Energy is a limited partnership formed by First Solar Inc. FSLR and SunPower Corp. SPWR to own and operate a portfolio of selected solar energy generation assets. Based in San Jose, CA, the partnership serves residential, commercial and industrial customers. 8point3 Energy began trading on the NYSE on Jun 19, 2015.

Let's see how things are shaping up for this announcement.

Why a Likely Positive Surprise?

Our proven model shows that 8point3 Energy is likely to beat earnings because it has the right combination of two key ingredients.

Zacks ESP: 8point3 Energy has an Earnings ESP of +500.00%. That is because the Most Accurate estimate is 4 cents while the Zacks Consensus Estimate is pegged at a loss of a penny. This is a meaningful and leading indicator of a likely positive earnings surprise.

You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: 8point3 Energy has a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Note that stocks with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) have a significantly higher chance of beating earnings estimates.

Also, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

The combination of 8point3 Energy's Zacks Rank #2 and +500.00% ESP makes us reasonably certain of an earnings beat.

8point3 Energy Partners LP Price and Consensus

8point3 Energy Partners LP Price and Consensus | 8point3 Energy Partners LP Quote

Factors Affecting this Quarter

The partnership swung into profit with a net income of $15.9 million in the fiscal third quarter of 2016 from $1.3 million incurred in the year-ago period. 8point3 Energy expects to witness similar solid results in the fiscal fourth quarter as well with strong cash flows.

During the fourth quarter, the partnership acquired a 34% interest in First Solar's 300-megawatt ("MW") Stateline solar project located in San Bernardino County, the majority of which is owned by Southern Company SO . The stake purchase in the solar project is expected to generate about $32 million in average annual pre-tax cash flow.

During the third-quarter earnings call, the partnership had revealed that for fourth-quarter fiscal 2016, it expects revenues in the range of $13.5 million to $14.5 million, net loss of $1 million to breakeven results, adjusted EBITDA in the band of $17 million to $18 million and $22 million to $24 million, in cash available for distribution.

For fiscal 2016, it expects revenues in the range of $60.2-$61.3 million, up from its prior expectation in the band of $57.1-$59.1 million. Net income is projected to be in $7.7-$8.7 million band compared with prior expectation in the range of $1.8-$3.8 million. Adjusted EBITDA is expected in the range of $75-$76 million compared with prior expectation of $68.8-$70.8 million and $74.8-$76.8 million in cash available for distribution, up from the prior expectation in the band of $71.0-$73.5 million.

Recently, the partnership declared a hike in the quarterly distribution of Class A shares for the fourth quarter of 2016, bringing the annualized payout to 99.60 cents per share from 96.24 cents paid earlier. The annual yield on distribution is 7.7%. The new quarterly distribution amounts to 24.90 cents per share, reflecting a 3.5% increase from the third-quarter level of 24.06 cents.

Price Movement

8point3 Energy's stock has lost about 6% in the last three months, narrower than the Zacks categorized Solar industry's 13.4% decline. This could be because of the partnership's focus on acquisition strategies that help to boost its performance.

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Southern Company (The) (SO): Free Stock Analysis Report

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SunPower Corporation (SPWR): Free Stock Analysis Report

8point3 Energy Partners LP (CAFD): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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