SunPower (SPWR - Free Report) is a Zacks Rank #2 (Buy) stock with a Value Style Score of B and a Growth Style Score of D. This solar name is benefitting from higher oil prices which sends consumers and businesses n search of alternatives. Solar is not a new alternative, but I am seeing a much bigger push to make solar part of your life.
There is of course the solar offering from Tesla (TSLA - Free Report) but more lately I have seen partnerships between solar names and places like Comcast, AT&T and a few others. The marketing pushes via those big outlets tell me that supply for the solar panels is there and that was one of the big red flags in this space for a long time.
I see a really good earnings history here with each of the last four quarters coming in ahead of the Zacks Consensus Estimate. The average positive earnings surprise has been 53% so they are beating the number in a big way each time.
A big part of the Zacks Rank is the move in earnings estimates. SPWR has seen numbers move around a lot, with the current quarter looking at a loss of 33 cents, and the full year 2019 coming in at a loss of 41 cents. Next quarter is going to be a loss of 11 cents, which tells me that profitability is coming in the second half of the year.
The 2020 number has moved from a gain of 11 cents 60 days ago to a gain of 20 cents. That is the move that has put the Zacks Rank at a #2.
The valuation here isn’t the best, but it isn’t the worst. I know there is a B for Value, but I do not make decisions based on the style scores. There is no PE at the trailing and forward numbers are all negative right now. Price to book comes back as an NA, so we only have the 0.6x price to sales number.
What we do know is that the swing to profitability is coming… and when that happens, stocks tend to lift in a big way as more potential investors will take a deeper look at a name like this.
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