SunPower Beats, Traders Fade News Initially (SPWR)

SunPower (NASDAQ: SPWR) has posted $0.39 Non-GAAP EPS on revenues $273.7 million.  This translates to $0.15 GAAP EPS.  These numbers are above plan according to First Call estimates of $0.35 non-GAAP EPS and $245.2 million in revenues.

The company is also raising guidance. It sees Q2 2008 non-GAAP EPS $0.48 to $0.52 on $330 million to $350 million revenues, which compares to estimates of $0.46 EPS and $295 million in revenues.  It also sees non-GAAP gross margin of 23% to 24%. For fiscal 2008 the company sees non-GAAP EPS of $2.10 to $2.20 on $1.3 billion to $1.375 billion revenues, while First Call has estimates at $2.07 EPS and $1.27 Billion in revenues.

It is also reconfirming 2009 forecast for total revenue to increase at least 40% from 2008 levels. If we interpolate this it translates to "at least" $1.82 Billion to $1.925 Billion, which compares to First Call targets of $1.88 Billion.

SunPower also noted that it is still aggressively expanding solar cell production by more than 150% in 2008 compared to 2007.  It expects silicon supply costs to decline by approximately 10% during 2008 and expects to reach its targets of 30% gross margin, 10% operating expenses and 20% operating margins on a non-GAAP basis, no later than the first quarter of 2009.  It also believes that 100% of projected solar cell production is secured with contracted silicon through 2010, and below is a table of its expected output:

MEGAWATT CAPACITY         2008    2009   2010
Nameplate capacity:                214     414     574
With Silicon Agreements:        255     450+    650+

Shares of SunPower are seeing a bit of a "sell the news" this morning and are trading down by more than 3% at $96.00 in pre-market trading.  The 52-week trading range is $51.00 to $164.49.  Based on yesterday’s close, these forecasts would give the company roughly a 47.4 to 45.2 forward P/E ratio (non-GAAP).

Jon C. Ogg
April 17, 2008

Jon Ogg produces the Special Situation Investing Newsletter.  He can be reached at [email protected] and he does not own securities in the companies he covers.