Solar Stocks Are Plummeting: Here's Why
- Shares of Sunedison Inc (NYSE: SUNE) plunged more 20 percent on Tuesday, sending shock waves across the entire solar sector.
- Sunedison reported a loss of $0.91 per share in its third quarter, worse than the $0.69 loss per share analysts were expecting.
- Sunedison said in its quarterly report that it will reduce sales of renewable energy assets to its Yieldcos until market conditions improved.
Shares of Sunedison plunged more than 20 percent late Tuesday morning despite trading in positive territory after the opening bell.
Sunedison reported its third quarter results earlier in the morning. The company said that it lost $0.91 per share in the quarter – worse than the $0.69 per share loss analysts were expecting. Revenue of $476 million was in-line with analyst estimates. However, the company said that it plans on reducing sales of renewable energy assets to its Yieldcos until conditions in the solar market improve.
Sunedison has been selling some of its power generating plants to Yieldcos that earn stable income through long-term contracts with utilities.
According to Reuters, Sunedison hinted that it might renegotiate or terminate existing acquisition deals. The company also plans on eliminated 15 percent of its workforce to help control costs.
Sunedison spent more than $6 billion on acquisitions in the past year but its strategy has backfired due to weak oil prices. The company also disclosed it needs $6.5 billion to $8.8 billion in capital to fund the construction of its renewable energy assets through 2016.
Canadian Solar Also Plunging Following Earnings Release
Canadian Solar Inc. (NASDAQ: CSIQ) also reported its third quarter results before Tuesday's market open.
The company earned $0.79 per share on revenue of $849.81 million. Analysts were looking for EPS of $0.28 and revenue of $733.93 million. Shares initially gained more than 6 percent as investors also cheered the company's upward revised full year 2015 sales outlook from $2.8 billion to $3 billion to a new range of $3.28 billion to $3.33 billion.
Shares quickly turned negative, following Sunedison's lead. The Street proved to be a non-believer in the better than expected third quarter print and revised guidance.
First Solar Reported Its Results On Monday
Shares of First Solar, Inc. (NASDAQ: FSLR) were lower by more than 5 percent late Tuesday morning.
The company earned $3.41 per share on better than expected revenue of $1.3 billion (versus expectations for $966 million) but the company also affirmed its full year fiscal 2015 earnings per share guidance of $4.30 to $4.50 – short of the $4.52 per share analysts were expecting.
Wall Street Pro Weighs In
Speaking to Benzinga, Cowen's Jeff Osborne expressed concerns of Yieldco assets flooding the market as solar firms are now looking to sell off their assets. The analyst also noted that by doing so the companies' margin profiles, along with the Street's valuation models may be negatively impacted.
Meanwhile, other solar related stocks were plunging on Tuesday. Shares of SolarCity Corp (NASDAQ: SCTY) lost more than 7 percent and hit a new 52-week low of $25.44 before slightly recovering above $26 per share.
Shares of SunPower Corporation (NASDAQ: SPWR) lost more than 8 percent, trading at $25.76.
Shares of JinkoSolar Holding Co., Ltd. (NYSE: JKS) lost more than 10 percent despite analysts at Morgan Stanley naming the company as a top Chinese solar pick.
Latest Ratings for CSIQ
|Sep 2016||JMP Securities||Initiates Coverage on||Market Perform|
|Aug 2016||Cowen & Co.||Downgrades||Outperform||Market Perform|
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