SunPower Surprise Leads Solar Shares Higher (SPWRA, FSLR, STP, ENER)

SunPower Corp. (NASDAQ: SPWRA) has managed to do what many were not expecting.  It blew the doors off of estimates.  Non-GAAP operating income for the quarter was $26.8 million, or $0.24 EPS.  Its revenues came in at $298 million, up from $214 million in Q1 but down from $383 million a year ago.  We had estimates pegged from Thomson Reuters at $0.14 EPS and $263.25 million in revenues.  It is also giving some solid guidance.  This is going to give a good hard boost for other larger solar players like First Solar, Inc. (NASDAQ: FSLR), Suntech Power Holdings Co. Ltd. (STP), and Energy Conversion Devices, Inc. (NASDAQ: ENER)

• Shares are soaring in reaction.  The stock closed up 3.4% at $24.85 today, and skyrocketed a whopping 19% to $29.60.  The 52-week range is $18.50 to $107.00.
• First Solar (FSLR) closed up 4% at $157.78, and those shares are up 3.6% at $163.50.  Suntech Power Holdings Co. Ltd. (STP) closed up almost 6% at $18.93 and its after-hours trading is up 6% at $20.07.  Energy Conversion Devices, Inc. (ENER) closed up almost 4% at $13.48 and its after-hours trading is up 7% at $14.50.

Components and Systems segments accounted for 63% and 37% of second-quarter 2009 revenue, respectively; non-GAAP Components segment gross margin was 24.6% and Systems segment gross margin was 18.9%.  The company is also reducing inventory levels and controlling variable expenses better has it said it “successfully adjusted pricing to maintain market share and price premium.”

More importantly, there is a key takeaway from its quotes here: “In all of our markets, we are encouraged by the improving industry trends we are seeing in both end demand and financing and we are well positioned for further growth in the second half of the year and 2010…. Our current pipeline and backlog gives us confidence that we will be able to meet our second half 2009 guidance. This confidence stems from a number of large systems we expect to have financed in the third quarter, as well as the positive trends we are seeing in the commercial and residential segments.”

GAAP gross margin was 19.6%, operating income of $9.9 million and that came to $0.26 EPS, including a $21.2 million or $0.21 non-taxable gain and a $5.9 million, or $0.04 per diluted share for non-cash interest charges.

For 2009, non-GAAP guidance was $1.35 billion to $1.7 billion in revenues, which compares with previous guidance of $1.3 billion to $1.7 billion. Net income is forecast at $1.15 to $1.60 EPS.  We have those estimates at $0.96 EPS and $1.32 billion in revenues.  It is now targeting production of approximately 400 megawatts, while its cap-ex outlook remains unchanged at $250 million to $300 million.

As far as what to expect from here ahead in solar earnings, we still expect to see very choppy reporting from the solar players.  There will be some like this that beat, but we also expect many to come clean with a disappointment.  This earnings season should set apart the men from the boys.

JON C. OGG