Expecting Strong Earnings Upside from First Solar and Solarfun Power

by: Jon Jacksonn July 17, 2008 | about stocks: FSLR / SOLF    

Jon Jacksonn

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Many things happening now are boosting the outlook for solar stocks in the energy industry. High oil pricing due to strong demand worldwide also places solar as the front-runner among renewable energies. US presidential candidates Barack Obama and John Mccain's strongly support solar and wind energy, making this sector very attractive for investment no matter who wins. There are two companies in this sector investors should expect strong earnings from for this quarter: First Solar (FSLR) and Solarfun Power Holdings (SOLF). 

First Solar is the leader in this sector. The company reported 1st quarter 2008 earnings of $.57 per share on 4/30/08. This beat the consensus of $0.482 by $0.088 (there were 24 analysts covering this company). The consensus of the 28 analysts covering FSLR for the 2nd quarter 2008 is a per share value of $.58 (source: Etrade). Investors should expect the company to beat estimates by at least $0.10 on July 28. This will send its shares over $300 with little difficulty. Going forward into 2009, analysts predict continous growth of revenue. However investors should keep in mind FSLR is a relative expensive stock. 

Solarfun Power Holdings is one of the best solar plays out there with astonishing growth of both revenue and margin. SOLF reported 1st quarter 2008 earnings of $2.21 per share on 5/21/08. This beat the consensus of $1.10 by $1.11 (there were 3 analysts covering this company). This is a nearly 101% surprise to the upside.

This coming quarter is no different. The company is expected to report earnings on August 15th, and the consensus of the 3 analysts covering SOLF for is for per share earnings of $1.55. Recently SOLF signed a 47MW deal with Schuco starting in 2009. Keep in mind this deal alone is twice as big as the SPWR deal with FPL power plant in Florida. Investors, though, seem to realize the significance gradually instead of pushing the stock price 20-30% higher in one day.

Disclosure: Long SOLF, FSLR and SPWR.

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This article has 6 comments:

  •  
    Jul 17 10:54 AM
    Jon,

    SOLF results were not in US $. Actual results were approx 1/7th of that in $.

    I am disappointed in Seeking Alpha. They obviously will allow anyone to blog.

    JP
    Reply | Link to Comment
  •  
    Jul 17 11:37 AM
    Let's be fair and civil here to Mr. Johnson and Seeking Alpha (and maybe put some blame on Yahoo Finance and/or the highly paid analysts).
    A few comments (SOLF ONLY):
    OUCHHHHHHHHHHH!
    Yahoo Finance shows analysts estimates in sync with what Mr. Johnson has stated.
    If an unsophicated investor "took this analysis to the bank" it would imply a PE of maybe 1-2.
    Fact ... one ADS = 5 shares.
    ADS EPS Q1 is (in Good Old American pesos .. sarcasm here) ...in US Dollars of $.3155. ERGO.....
    Not Seeking Alpha's fault...and Mr. Johnson should do a bit more research before publication and
    I do agree with an upside surprise!
    God Bless America!
    Reply | Link to Comment
  •  
    Jul 17 06:15 PM
    "US presidential candidates Barack Obama and John Mccain's strongly support solar and wind energy,"

    This is half true. Obama strongly supports alternatives to fossil fuels. However, McCain has never stated specific support for either solar or wind. Since he would like to retain his long-standing massive backing from Big Oil, he is unlikely to.
    Reply | Link to Comment
  •  
    Jul 17 10:46 PM
    The fact that this quarter's earning will be almost 40% less than last quarter makes it difficult to ramp up in share price. However, I think the punishment is overdone.
    Reply | Link to Comment
  •  
    Jul 18 08:14 AM
    Right, all financial reporting firms should indicate the currency of the figures. However this does not excuse anyone who writes as an authority and does not undestand the facts. SOLF's number being in RMB has been pointed out repeatedly on S/A, so it is a wonder that even the novice blogger has not read this before - or just has not done their homework.
    Reply | Link to Comment
  •  
    Jul 22 03:53 AM
    The author of this article has actually written rubbish. When I say 'rubbish', I mean that that is what a reader would come away with after reading the article. There is absolutely no substance in what is written. Everything is based on pure speculation that he'd rather quit his job and become a fortune teller. He even knows how much the share price of FSLR will go to. Only an idiot will make such a statement aka Analysts. And when does not know the difference when reading the eps of companies, one should just quit even attempting to write a blog.

    How can one write :
    FSLR reported 1st quarter 2008 earnings of $.57 per share on 4/30/08

    SOLF reported 1st quarter 2008 earnings of $2.21 per share on 5/21/08. This beat the consensus of $1.10 by $1.11

    and not know the difference?. Does the guy ever re-read his own article before posting?. And need one say more?.
    Reply | Link to Comment
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