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ReneSola (SOL) Reports Q3 Preliminary Results, Stock Rallies

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ReneSola Ltd (SOL - Free Report) recently released its preliminary unaudited financial results for third-quarter 2020. Notably, the company’s expectations for the third-quarter results are upbeat.

The solar project developer is projected to report its third-quarter results on Dec 1.

Investors Gain Confidence

ReneSola’s recently announced preliminary results boosted investors’ confidence. As a result, share price of this company rose 10.4% to close at $3.90 on Nov 12.

Impressively, amid the COVID-19 influenced market uncertainties, shares of ReneSola have been rallying for quite some time. Notably, its share price has gained 174.9% in the year-to-date period, outperforming the industry's 145.8% growth.

Bullish Revenue & Margin Expectations

According to the preliminary results, the company’s revenues for the third quarter are likely to be at the high end of the previously announced guidance range of $8 million to $10 million. The current guidance indicates a notable deterioration from the year-ago quarter’s reported revenues of $66 million. The Zacks Consensus Estimate for revenues of $9.9 million falls within the expected range.

Gross margin for third-quarter 2020 is projected to be more than 42%, compared with the prior guidance range of 38-42%. The new guidance suggests an expansion of more than 1740 basis points, when compared to the year-ago quarter’s level of 24.6%.

Rationale Behind Upbeat View

On its second-quarter earnings call, ReneSola had revealed that the company is operating a portfolio of 204 megawatts (MW) of solar projects that generate high-margin recurring revenues. We believe such projects must have boosted the company’s guidance for the soon-to-reported quarter.

Moreover, as of Jun 30, ReneSola had a handful of solar portfolios in the sales process, some which must have been sold during the July-September quarter. Such project monetization must have also driven the upbeat revenue and margin guidance.

For instance, in August, ReneSola completed a 21.05 MWp portfolio of community solar projects in Minnesota, which also started commercial operation. Notably, this community solar portfolio was sold by ReneSola to Nautilus Solar Energy. Therefore, the portfolio’s completion must have added impetus to ReneSola’s revenue growth in the third quarter.

What Lies Ahead?

ReneSola’s upcoming quarterly results are also expected to reflect solid cost-control initiatives adopted by the company. This coupled with the upbeat revenue and margin guidance is expected to have contributed to its quarterly bottom-line performance.

Moreover, ReneSola aims to add incremental project pipeline in its core markets, including the United States, the United Kingdom, Spain, Poland, France, Germany and Hungary to reach 1GW by the end of 2020. We expect the upcoming quarterly results to reflect the company’s progress in achieving this target.

Zacks Rank

ReneSola currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some Q3 Solar Releases

Here are a few solar stocks below that have come with better-than-expected Q3 earnings.

Enphase Energy (ENPH - Free Report) reported third-quarter 2020 adjusted earnings of 30 cents per share, which surpassed the Zacks Consensus Estimate of 24 cents by 25%.

First Solar (FSLR - Free Report) reported third-quarter 2020 adjusted earnings of $1.45 per share, which surpassed the Zacks Consensus Estimate of 60 cents by 141.7%.

SunPower (SPWR - Free Report) incurred an adjusted loss of 4 cents per share in third-quarter 2020, narrower than the Zacks Consensus Estimate of a loss of 5 cents.

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