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3 Clean Energy Stocks Set to Beat Q1 Earnings Estimates

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The Q1 reporting cycle is set to start for clean energy stocks, particularly solar and alternative energy companies, which are part of the broader Oil-Energy sector. Notably, results of these companies are expected to reflect solid installation activities driven by pent-up demand.

As stated by the American Clean Power Association (ACPA), wind is currently the largest source of renewable electricity generation in the United States, providing more than 7.4% of the country’s electricity. With the gradual recovery of the economy since the third quarter of 2020, an upward trend in solar installation has been observed, a trend expected to have continued in the first quarter of 2021.

Factors like rapidly increasing corporate investments in renewables, favorable government policies such as extended federal Investment Tax Credit (ITC) for offshore wind energy,  extension of production tax credit along with declining price of raw materials like wind turbines and solar modules are likely to have played key roles in contributing to clean energy stocks’ quarterly performance.

Moreover, interest in hydrogen as an alternative transportation fuel has been increasing owing to its ability to power fuel cells in zero-emission vehicles. Hence, stocks involved in fuel cell like Bloom Energy (BE - Free Report) , Plug Power (PLUG - Free Report) and FuelCell Energy, Inc. (FCEL - Free Report) that use fuel cell technology to supply clean energy have been gaining traction. We expect these stocks to report favorable Q1 results.

However, both the earnings and revenue projections for the broader market indicate a decline from the first-quarter 2020 scorecard. This annual slack, we believe, is likely to have stemmed from lower oil price and production, which might have affected energy majors’ upstream operations.

Q1 Projections

Per the latest Earnings Preview, first-quarter earnings for the Oil-Energy sector are expected to decline 18.9% on 8.2% sales drop.

Zacks Methodology

Given the high degree of diversity in the clean energy space, finding the right stocks with the potential to beat estimates might be quite a daunting task.

However, our proprietary Zacks methodology makes this fairly simple.

We are focusing on stocks that have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

Our research shows that for stocks with this combination, chances of an earnings surprise are as high as 70%.

Earnings ESP provides the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Our Choices

Here we present three stocks that are expected to beat earnings estimates in this reporting cycle.

Ameresco (AMRC - Free Report) is an independent provider of comprehensive energy efficiency solutions for facilities throughout North America. The company designs and constructs a wide range of renewable energy plants using LFG, wastewater treatment biogas, solar, biomass, other bio-derived fuels, wind and hydro sources of energy. The company, with an Earnings ESP of +16.05% and a Zacks Rank #3, is expected to release earnings on May 4.

The company beat the Zacks Consensus Estimate in the trailing four quarters, delivering an earnings surprise of 78.24%, on average.

Ameresco, Inc. Price and EPS Surprise

Ameresco, Inc. Price and EPS Surprise

Ameresco, Inc. price-eps-surprise | Ameresco, Inc. Quote

Another company likely to come up with an earnings beat this time around is Ormat Technologies (ORA - Free Report) . It has a Zacks Rank #3 and an Earnings ESP of +12.66%. It is scheduled to release earnings on May 5.

Over the trailing four quarters, the company surpassed the Zacks Consensus Estimate on each occasion, the surprise being 16.08%, on average.

Ormat Technologies, Inc. Price and EPS Surprise

Ormat Technologies, Inc. Price and EPS Surprise

Ormat Technologies, Inc. price-eps-surprise | Ormat Technologies, Inc. Quote

Another prominent clean energy stock is SolarEdge Technologies (SEDG - Free Report) , which has a Zacks Rank #3 and an Earnings ESP of +0.99%. The company is one among the pioneers in manufacturing inverter systems for solar photovoltaic installations. It is scheduled to release earnings on May 3.

Over the trailing four quarters, the company surpassed the Zacks Consensus Estimate thrice, and missed once, the surprise being 21.65%, on average.

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