Solar Stocks Continue to Fall on RGS Energy (RGSE) Earnings Miss, Industry Downtrend

Joel Anderson |

Solar stocks were broadly down again on Wednesday, making it a 5th straight day of losses that have hammered the previously booming industry. The Guggenheim Solar ETF (TAN) is down over 2.75 percent on the day, making losses since March 20 over 11.5 percent.

Among the notable losers on the day were First Solar (FSLR) , down almost 4.25 percent; Canadian Solar (CSIQ) , over 6.5 percent lower; Trina Solar Limited (TSL) , off over 6.25 percent; ReneSola (SOL) , plunging nearly 11.25 percent; JinkoSolar Holdings (JASO) fell over 6 percent; and Hanwha Solar ($HSO) saw shares slip over 10.5 percent. Bucking the trend, though, was SunPower Corporation (SPWR) , which managed to gain over 2.5 percent despite the losses by its competitors.

The day’s biggest loser, though, was RGS Energy ($RGSE), which saw share plunge nearly 16 percent on an earnings report that missed analyst expectations. While a FactSet poll of analysts found a consensus expectation of losses of $0.06 a share for the company’s Q4 2013, the report, released after the closing bell on Tuesday, showed a net loss of $2.5 million or $0.08 a share. This was an improvement, though, over Q4 2012 when the company reported losses of $3.8 million or $0.14 a share, and full-year revenues for 2013 climbed 9 percent to $101.3 million.

ROTH Capital analyst Philip Shen saw enough that he like to boost his price target on the stock to $6 and increase FY 2014 revenue projections to $139 million. Shen’s sunny outlook stemmed from the company’s business model which set them aside from industry peers.

“We like the flexibility in financing this approach could provide for RGSE, as the company could develop the right mix of sales from the different types of transactions to drive earnings and value,” said Shen. “Notably, the company’s GAAP financial statements may appear cleaner compared with other downstream players.”

While this could be viewed as just another example of the industry moving in lock-step as many of these companies didn’t appear to have specific news items motivating their moves, there are also some considerable headwinds working against solar stocks at the moment. An ongoing trade war between China and the United States has hurt the industry, and the another sign on Monday that the Chinese economy is slowing down, potentially hurting some growth estimates for companies on both sides of the Pacific.

However, while there are trends cutting into growth, it should be noted that it’s pretty considerable growth that they’re cutting into. Solar installations have skyrocketed over the last two years, and most estimates have them continuing to grow at rapid rates. More likely, the recent pull-back for solar stocks is simply a reflection of the market backing off of what were the hottest stocks of 2013. The declines are minor when compared to the long-term gains and could be viewed as simply a market correction.

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
RGSE Real Goods Solar Inc. 0.45 -0.01 -2.09 440,169
TSL Trina Solar Limited Sponsored ADR (Cayman Islands) 9.41 -0.11 -1.16 949,849
SPWR SunPower Corporation 6.64 0.12 1.84 2,344,272
JASO JA Solar Holdings Co. Ltd. 5.13 -0.17 -3.21 951,658
FSLR First Solar Inc. 30.15 0.01 0.03 2,311,128
CSIQ Canadian Solar Inc. 11.07 -0.21 -1.86 1,257,820
SOL Renesola Ltd. of Beneficial Interest 0.69 0.00 0.07 360,001
JSCRF Minori Solutions Co Ltd n/a n/a n/a 0

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