We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Zacks Industry Outlook Highlights: Enphase Energy, SolarEdge and First Solar
Read MoreHide Full Article
For Immediate Release
Chicago, IL – August 17, 2020 – Today, Zacks Equity Research discusses Solar, including Enphase Energy, Inc. (ENPH - Free Report) , SolarEdge Technologies, Inc. (SEDG - Free Report) and First Solar, Inc. (FSLR - Free Report) .
The Zacks Solar industry can be fundamentally segregated into two sets of companies. While one group is involved in the designing and production of high-efficiency solar modules, panels and cells, the other set is engaged in installation of grids and, in some cases, entire solar power systems.
The industry also includes a handful of companies that manufacture inverters for solar power systems, which convert solar power from modules into electricity required by electric grids.
Per a report by Solar Energy Industries Association (SEIA), solar accounted for 40% of all new electric generating capacity added to the grid in the United States in 2019. This was more than any other energy source and the highest in the industry's history.
Here are the three major industry themes:
No doubt, the novel coronavirus outbreak is hurting all sectors across the board, and the U.S. solar industry is no exception. Per the latest report by SEIA, the coronavirus pandemic has caused more than 72,000 solar workers to lose their jobs since February 2020. Notably, the impact of job losses and work stoppages has been acute in the U.S. distributed generation sector, which includes residential and commercial projects. This clouds the growth prospects of the U.S. solar industry. Wood Mackenzie Power & Renewables forecasts that distributed solar will experience a 31% decline in 2020.
Although Q1 installation data was impressive in the United States, the near-term forecasts are not so bright. SEIA projects a 25% decline in 2020 U.S. solar residential volumes from 2019, which is also down significantly from its pre-Covid-19 forecast. On the other hand, coronavirus impacts will also weigh on the non-residential solar market. Accordingly, the near-term impact of the coronavirus pandemic on non-residential solar is expected to cause significant project delays in 2020, resulting in a 38% decline from 2019 volumes. Delayed projects will spill into 2021, leading to a 49% increase over 2020 but still well below both 2019 and pre-Covid-19 forecast levels. Such an unimpressive projection might spook investors.
Rapidly increasing corporate investments in solar energy have been boosting the U.S. solar market. From rooftop systems for local hardware stores to solar parking canopies supporting corporate headquarters to large solar installations powering data centers, solar installations are as diverse and varied as the companies offering them. Falling prices, and flexible financing and procurement options have led to rapid growth in off-site corporate solar adoption, which made up for more than a third of all commercial solar activity in 2018. Although the current pandemic-led crisis situation has brought solar installation activities to a temporary halt, soaring demand for carbon-free power is here to stay. So, once the COVID-19 risk subsides, we expect to see a gradual recovery in the industry trends, which will once again attract substantial corporate investments.
Zacks Industry Rank Indicates Dim Prospects
The Zacks Solar industry is housed within the broader Zacks Oils-Energy sector. It currently carries a Zacks Industry Rank #194, which places it in the bottom 23% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bleak near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The industry’s position in the bottom 50% of the Zacks-ranked industries is due to a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts have lost confidence in this group’s earnings growth potential in recent times. Evidently, the industry’s earnings estimates for the current fiscal year have gone down by a huge 70% since Mar 31.
Before we present a few solar stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Outperforms S&P 500 and Sector
The solar industry has outperformed the Zacks S&P 500 composite and its own sector over the past year. The stocks in this industry have collectively gained 89.2%, while the Oils-Energy Sector has lost 26.4%. The Zacks S&P 500 composite has moved up 18.8% in the same time frame.
Industry’s Current Valuation
On the basis of trailing 12-month EV/EBITDA, which is commonly used for valuing solar stocks, the industry is currently trading at 32.61X compared with the S&P 500’s 12.75X and the sector’s 4.78X.
Over the last five years, the industry has traded as high as 32.84X, as low as 3.62X, and at the median of 8.22X.
Bottom Line
One cannot deny the fact that the coronavirus pandemic has hit the industry hard and will continue to affect solar stocks in the near term.
Nevertheless, factors like plummeting prices of solar modules and panels, increase in the number of states that have made it mandatory to adopt 100% clean energy in the next few years, and a significant spike in corporate investments are expected to keep the solar industry buoyant.
Even amid such uncertainties, the U.S. solar industry has managed to outperform its sector and the broader market over the past year.
Enphase Energy: For this solar microinverter manufacturer, the Zacks Consensus Estimate for earnings for the current year indicates a solid year-over-year improvement of 42.4%. Its 2020 earnings estimate has moved up 14.5% in the past 30 days.
SolarEdge Technologies: For this solar inverter developer, the Zacks Consensus Estimate for 2020 sales indicates year-over-year improvement of 5%. It came up with an average earnings surprise of 5.77% in the trailing four quarters.
First Solar: For this solar panels manufacturer, the Zacks Consensus Estimate for 2020 earnings indicates a year-over-year improvement of 95.7%. It came up with an average earnings surprise of 48.8% in the trailing four quarters.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through Q2 2020, while the S&P 500 gained an impressive +44.0%, five of our strategies returned +50.9%, +93.8%, +122.2%, +153.0%, and even +156.8%.
This outperformance has not just been a recent phenomenon. From 2000 – Q2 2020, while the S&P averaged +5.5% per year, our top strategies averaged up to +51.7% per year.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Zacks Industry Outlook Highlights: Enphase Energy, SolarEdge and First Solar
For Immediate Release
Chicago, IL – August 17, 2020 – Today, Zacks Equity Research discusses Solar, including Enphase Energy, Inc. (ENPH - Free Report) , SolarEdge Technologies, Inc. (SEDG - Free Report) and First Solar, Inc. (FSLR - Free Report) .
Link: https://www.zacks.com/commentary/1041814/solar-stock-prospects-hurt-by-coronavirus-led-project-delays
The Zacks Solar industry can be fundamentally segregated into two sets of companies. While one group is involved in the designing and production of high-efficiency solar modules, panels and cells, the other set is engaged in installation of grids and, in some cases, entire solar power systems.
The industry also includes a handful of companies that manufacture inverters for solar power systems, which convert solar power from modules into electricity required by electric grids.
Per a report by Solar Energy Industries Association (SEIA), solar accounted for 40% of all new electric generating capacity added to the grid in the United States in 2019. This was more than any other energy source and the highest in the industry's history.
Here are the three major industry themes:
Zacks Industry Rank Indicates Dim Prospects
The Zacks Solar industry is housed within the broader Zacks Oils-Energy sector. It currently carries a Zacks Industry Rank #194, which places it in the bottom 23% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bleak near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The industry’s position in the bottom 50% of the Zacks-ranked industries is due to a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts have lost confidence in this group’s earnings growth potential in recent times. Evidently, the industry’s earnings estimates for the current fiscal year have gone down by a huge 70% since Mar 31.
Before we present a few solar stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Outperforms S&P 500 and Sector
The solar industry has outperformed the Zacks S&P 500 composite and its own sector over the past year. The stocks in this industry have collectively gained 89.2%, while the Oils-Energy Sector has lost 26.4%. The Zacks S&P 500 composite has moved up 18.8% in the same time frame.
Industry’s Current Valuation
On the basis of trailing 12-month EV/EBITDA, which is commonly used for valuing solar stocks, the industry is currently trading at 32.61X compared with the S&P 500’s 12.75X and the sector’s 4.78X.
Over the last five years, the industry has traded as high as 32.84X, as low as 3.62X, and at the median of 8.22X.
Bottom Line
One cannot deny the fact that the coronavirus pandemic has hit the industry hard and will continue to affect solar stocks in the near term.
Nevertheless, factors like plummeting prices of solar modules and panels, increase in the number of states that have made it mandatory to adopt 100% clean energy in the next few years, and a significant spike in corporate investments are expected to keep the solar industry buoyant.
Even amid such uncertainties, the U.S. solar industry has managed to outperform its sector and the broader market over the past year.
Here, we are presenting three solar stocks with a Zacks Rank #3 (Hold) that investors may want to retain in their portfolio. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Enphase Energy: For this solar microinverter manufacturer, the Zacks Consensus Estimate for earnings for the current year indicates a solid year-over-year improvement of 42.4%. Its 2020 earnings estimate has moved up 14.5% in the past 30 days.
SolarEdge Technologies: For this solar inverter developer, the Zacks Consensus Estimate for 2020 sales indicates year-over-year improvement of 5%. It came up with an average earnings surprise of 5.77% in the trailing four quarters.
First Solar: For this solar panels manufacturer, the Zacks Consensus Estimate for 2020 earnings indicates a year-over-year improvement of 95.7%. It came up with an average earnings surprise of 48.8% in the trailing four quarters.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through Q2 2020, while the S&P 500 gained an impressive +44.0%, five of our strategies returned +50.9%, +93.8%, +122.2%, +153.0%, and even +156.8%.
This outperformance has not just been a recent phenomenon. From 2000 – Q2 2020, while the S&P averaged +5.5% per year, our top strategies averaged up to +51.7% per year.
See their latest picks free >>
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
http://www.zacks.com
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performancefor information about the performance numbers displayed in this press release.