Why SunPower's Shares Popped 24.8% Today

What happened

Shares of SunPower (NASDAQ: SPWR) jumped as much as 24.8% in early trading Thursday after the company reported third-quarter 2019 results. Shares settled significantly as the day went on and were only up 8.7% at 11:45 a.m. EDT.

So what

Non-GAAP revenue was up 10.9% to $491.7 million, adjusted EBITDA was $42.0 million, and net income was $10.6 million, or $0.07 per share. That compares to guidance of $450 million to $490 million in revenue and adjusted EBITDA of $30 million to $50 million. Analysts were expecting just $0.02 per share in earnings, so that was the biggest surprise today.

Utility-scale solar project built in a field with SunPower solar panels.

Image source: SunPower.

Interestingly, management didn't increase financial guidance, which for the full year is still for $1.9 billion to $2.1 billion in non-GAAP revenue and $100 million to $120 million in adjusted EBITDA.

Now what

There have been a lot of ebbs and flows in solar stocks in 2019, and investors didn't know if factors like tariffs and things like wildfires would impact companies like SunPower. But the company continues to perform well as it upgrades equipment to produce the A-Series high-efficiency solar panel for residential markets and the P-Series product for commercial- and utility-scale projects.

I think the bounce today is really just recovering some of what the stock has lost in recent weeks, so I wouldn't read too much into it. What I'm looking for is continued gross margin improvement beyond the 15.9% reported in the third quarter. If gross margin peaks at more than 20%, this could be a top renewable energy stock once again.

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Travis Hoium owns shares of SunPower. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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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