Back to top

Image: Bigstock

Why Is SolarEdge (SEDG) Up 25.3% Since Last Earnings Report?

Read MoreHide Full Article

It has been about a month since the last earnings report for SolarEdge Technologies (SEDG - Free Report) . Shares have added about 25.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is SolarEdge due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

SolarEdge Q4 Earnings Miss Estimates, Revenues Rise

SolarEdge reported fourth-quarter adjusted earnings of $1.10 per share, which lagged the Zacks Consensus Estimate of $1.29 by 14.7%. However, the bottom line improved 12.2% from the prior-year quarter’s earnings of 98 cents per share.

Barring one-time adjustments, the company posted GAAP earnings of 74 cents per share compared with 33 cents in the year-ago quarter.

SolarEdge reported earnings per share of $4.81 for full-year 2021, which increased 17% from $4.11 reported in 2020.

Revenues

SolarEdge’s revenues of $551.9 million in the fourth quarter surpassed the Zacks Consensus Estimate of $549 million by 0.6%. The top line surged 54% from the year-ago quarter’s $358.1 million.

Revenues from the solar segment were $502.7 million, up 54% from $327.1 million in the prior-year quarter.

In 2021, SEDG generated sales worth $1.96 billion, up 34.6% from the year-ago figure.

Operational Highlights

SolarEdge shipped a total of 1.92 gigawatts (AC) of inverters in the reported quarter.

Adjusted gross margin contracted 220 basis points from the prior-year gross margin of 32.5% to 30.3%.

Adjusted operating expenses went up 29% year over year to $94.1 million.

Adjusted operating income in the quarter totalled $72.9 million, up 68% from the year-ago quarter’s $43.5 million.

Financial Performance

SolarEdge had $530.1 million of cash and cash equivalents at the end of 2021, down from $827.1 million at the end of 2020.

Cash flow from operating activities amounted to $214.1 million at the end of 2021, down from the prior year’s $222.7 million.

Total long-term liabilities were $1,056.8 million at the end of 2021 compared with $915.3 million as of Dec 31, 2020.

Q1 Guidance

For the first quarter of 2022, SEDG expects revenues in the range of $615-$645 million. The Zacks Consensus Estimate for the same is pegged at $593.5 million, which is lower than the company’s guided range.

Revenues from solar products in the first quarter are projected in the range of $575-$595 million.

While the company’s adjusted gross margin is estimated at 28-30%, the gross margin from the sale of solar products is anticipated at 30-32%.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

The consensus estimate has shifted -9.39% due to these changes.

VGM Scores

At this time, SolarEdge has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, SolarEdge has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


SolarEdge Technologies, Inc. (SEDG) - free report >>

Published in