Back to top

Image: Bigstock

3 Clean Energy Stocks Set to Beat Q2 Earnings Estimates

Read MoreHide Full Article

A handful of clean energy stocks, particularly solar and alternative energy companies, which are part of the broader Oil-Energy sector, are yet to release their Q2 numbers. Notably, the results of these companies are expected to reflect solid installation activities, driven by the economic recovery in recent times that has been boosting demand.

Amid this backdrop, we expect clean energy stocks like Shaols Technologies (SHLS - Free Report) , Gevo (GEVO - Free Report) and Enovix Corporation (ENVX - Free Report) to report favorable Q2 results.

What to Expect from Clean Energy Stocks’ Q2 Results?

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

Moreover, thanks to the economic recovery observed over the past few quarters, there has been an upward trend in installation activities for clean energy stocks, a trend expected to have driven demand in the second quarter of 2022 as well.

Evidently, shipments of solar batteries as well as microinverters of Enphase Energy (ENPH - Free Report) , a prominent solar stock, observed a solid year-over-year surge in the United States during the second quarter. Such solid shipments boosted the Enphase’s Q2 revenues significantly, a trend expected to be reflected in the results of other clean energy stocks as well.

On the other hand, as stated by the American Clean Power Association (ACPA), wind is currently the largest source of renewable electricity generation in the United States, providing almost 9.8% of the country’s electricity. So, no doubt clean energy stocks focused on wind energy must have also performed well in Q2.

Also, growing interest in hydrogen as an alternative transportation fuel owing to its ability to power fuel cells in zero-emission vehicles has been driving revenues and earnings of clean energy stocks. Hence, both the earnings and revenue Q2 projections for the broader market indicate a decent improvement from the second-quarter 2021 scorecard.

However, higher logistics costs and component costs as a result of global supply chain pricing pressure may have continued to partially impact the overall performance of the clean energy companies.

Q2 Projections

Per the latest Earnings Preview, second-quarter earnings of the Oil-Energy sector are expected to improve a solid 231.7% on 47.3% sales surge.

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, the 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.

Shaols Technologies: It manufactures a diverse portfolio of solar balance-of-systems products, including combiner/re-combiner boxes, disconnect boxes, custom harnessing solutions, junction boxes, wire, in-line fuses and racking and monitoring solutions. During the second quarter, Shaols increased the size of its existing revolving credit facility by $50 million to $150 million, which in turn reflects its solid financial position.

The company, with an Earnings ESP of +4.26% and a Zacks Rank #3, is slated to release earnings on Aug 15. The Zacks Consensus Estimate for SHLS’ Q2 sales implies an improvement of 23.4% from the prior year quarter figure.

Gevo: It is a renewable chemicals and advanced biofuels company engaged in the development of biobased alternatives to petroleum-based products using a combination of synthetic biology and chemistry. During the second quarter, Gevo announced that its renewable natural gas project in Northwest Iowa has been producing biogas and upgrading and injecting RNG into the natural gas pipeline. This is likely to have boosted its Q2 revenues.

The company, with an Earnings ESP of +25.00% and a Zacks Rank #2 is slated to release earnings on Aug 8. The Zacks Consensus Estimate for GEVO’s Q2 sales suggests an improvement of 44.1% from the prior-year quarter figure.  The consensus estimate for the bottom line also indicates an increase.

Gevo, Inc. Price and EPS Surprise

Gevo, Inc. Price and EPS Surprise

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

Enovix: It is involved in the design and manufacture of 3D Silicon Lithium-ion batteries. During the second quarter, Enovix announced that it had started shipping its first commercial battery cells for revenues, which in turn is expected to have boosted its Q2 performance.

The company, with an Earnings ESP of +6.67% and a Zacks Rank #3, is slated to release earnings on Aug 10. The Zacks Consensus Estimate for ENVX’s Q2 bottom line indicates a solid improvement when compared with the prior-year quarter figure.

Enovix Corporation Price and EPS Surprise

Enovix Corporation Price and EPS Surprise

Enovix Corporation price-eps-surprise | Enovix Corporation Quote

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Published in