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SunPower (SPWR) to Post Q4 Earnings: What's in the Cards?

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SunPower Corporation SPWR is set to report fourth-quarter and 2019 results on Feb 12, after market close.

In the last reported quarter, the company delivered a positive earnings surprise of 800%. SunPower has a four-quarter positive earnings surprise of 173.27% on average.

Let’s discuss the factors that are likely to get reflected in the upcoming quarterly results.

Factors at Play

During the third-quarter earnings call, SunPower had announced quite a few strategic decisions including realignment of its Energy Services business by combining the residential and small commercial dealer channels, which started from the fourth quarter.

Moreover, the company has been reorganizing the Energy Services business into an indirect channel business in a commercial direct model in order to drive scale, lower channel costs and improve its margin profile. Such initiatives are expected to boost the soon-to-be-reported quarter’s results.

SunPower Corporation Price and EPS Surprise

SunPower Corporation Price and EPS Surprise

SunPower Corporation price-eps-surprise | SunPower Corporation Quote

Moreover, SunPower is likely to have successfully shipped significant volumes of its P-series and Maxeon 5 solar panels in the fourth quarter. Further, given strong demand for its products in Latin America, the company has increased its sales resources in that territory. This in turn must have boosted its fourth-quarter top line.

The Zacks Consensus Estimate for fourth-quarter sales is pegged at $647.6 million, which indicates a solid 23.3% rise from the year-ago quarter’s reported figure. The estimate is above the mid-point of the company guided range of $520-$720 million.

Considering the initiatives undertaken by SunPower, its overall margin from the Energy Services business is expected to have improved in the fourth quarter. Strength in its residential business is expected to have been backed by strong backlog and improving cost structure. Also, synergies achieved by combining its residential and commercial channel businesses and enhanced focus of the commercial team on the direct business are projected to have boosted the company’s bottom line in the soon-to-be-reported quarter.

The Zacks Consensus Estimate for the company’s fourth-quarter earnings is pegged at 13 cents per share, which suggests an improvement of 161.9% from the year-ago quarter’s reported loss of 21 cents.

Meanwhile, in November 2019, SunPower revealed its plans to separate into two independent, complementary, strategically-aligned and publicly-traded companies —SunPower and Maxeon Solar Technologies. Further updates on this agreement can be expected once the company releases its quarterly numbers on Feb 12.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for SunPower this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.

Earnings ESP: The company’s Earnings ESP is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: SunPower carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Upcoming Solar Releases

Enphase Energy (ENPH - Free Report) carries a Zacks Rank #2 and is scheduled to report fourth-quarter 2019 results on Feb 18.

First Solar FSLR has a Zacks Rank #3 and is set to release fourth-quarter results on Feb 20.

Vivint Solar VSLR carries a Zacks Rank #3 and is expected to post fourth-quarter 2019 results soon.

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