What SolarCity Says About First Solar Earnings

First Solar reported EPS of just $0.04 in the second quarter, far below the consensus estimate of $0.37. The shortfall was attributed to the timing of when payments are received and booked. In the first quarter of this year, First Solar posted EPS of $1.10 against a consensus estimate of $0.56. In other words, consensus estimates of the company’s EPS are little more than a shot in the dark.

If we look at the results from SolarCity Corp. (NASDAQ: SCTY), which reported results after markets closed Wednesday, the solar installer lost $0.75 a share, about 31% better than analysts had expected. On a GAAP basis, SolarCity posted EPS of $0.19 attributable to the company’s stockholders, but that was overwhelmed by a loss of $0.96 attributed to noncontrolling interests.

Since late March the two stocks have tracked one another except for the periods right after earnings are reported. SolarCity’s results seem to leave a more favorable first impression on investors, but the two stocks eventually converge again. Still, SolarCity’s disappointing report Wednesday could break the pattern.

Short interest in First Solar stock of around 9 million represents about 12% of the company’s float, or three days to cover. Year to date, shares trade about 4.7% higher, but for the past 12 months the stock is down nearly 5.5%. SolarCity is doing little worse year-to-date, down about 8.4%, but better for the trailing 12 months, down just 3.8%. At the mid-October reporting date, some 29% of SolarCity’s stock was short, amounting to more than 15 million shares, or nearly 11% of its total float.

First Solar was trading up about 1.5% in the late morning Thursday, at $57.13 in a 52-week range of $47.04 to $74.84. SolarCity traded down more than 4% at $52.22, in a 52-week range of $42.38 to $88.35.

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