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Solar ETF Shines on Mostly Upbeat Q1 Earnings

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The pure-play Invesco Solar ETF (TAN - Free Report)  has added about 10% past week (as of May 11, 2020), beating S&P 500 ETF (SPY - Free Report) ’s 3.1% gains and Nasdaq-100 ETF (QQQ - Free Report) ’s 5.3% advancement. Earnings releases have mainly driven the rally as most major industry players came up with upbeat results (read: 6 ETF Areas Beating S&P 500 in 2020).

There has been a growing acceptance of solar energy globally and the cost of construction is declining. Electric car maker Tesla’s solar venture is another positive for this space. Solar stocks hail from a favorable Zacks industry (placed at the top 23% of total 250+ industries in the Zacks universe).

The solid upsurge in TAN makes it necessary to examine solar stocks’ earnings this season. Below we highlight wining results from Enphase Energy Inc. (ENPH - Free Report) and SolarEdge Technologies Inc. (SEDG - Free Report) while First Solar Inc.’s (FSLR - Free Report) miss marred the optimism around the stock. SunPower Corporation (SPWR - Free Report) too delivered muted performance past week (read: Bet on "American Magic" With 4 Solid Small-Cap Sector ETFs).

Inside SPWR Earnings

SunPower Corp. incurred adjusted loss of 10 cents per share in first-quarter 2019, narrower than the Zacks Consensus Estimate of a loss of 21 cents. The company had incurred a loss of 41 cents per share a year ago.  Excluding one-time adjustments, the company incurred a GAAP loss of a penny per share, narrower than the prior-year quarter’s loss of 63 cents. SunPower’s adjusted revenues came in at $454.4 million, surpassing the Zacks Consensus Estimate of $442 million by 2.8%.

Inside SEDG Earnings

SolarEdge Technologies reported first-quarter 2020 adjusted earnings of $1.03 per share, which missed the Zacks Consensus Estimate of $1.20 by 14.2%. The bottom-line, however, surged 47.1% from 70 cents reported in the prior-year quarter. Barring one-time adjustments, the company posted GAAP earnings of 81 cents per share compared with 39 cents in the year-ago quarter. SolarEdge’s revenues of $431.2 million surpassed the Zacks Consensus Estimate of $418 million by 3.2%. The top line also surged 59% year over year on solid shipments. The Q2 revenue guidance is below the Zacks Consensus Estimate.

Inside FSLR Earnings

First Solar Inc. reported first-quarter 2020 adjusted earnings of 85 cents per share, which surpassed the Zacks Consensus Estimate of 24 cents by 254.2%. The reported figure also improved significantly from the prior-year quarter’s loss of 64 cents. First Solar’s sales of $532.1 million missed the Zacks Consensus Estimate of $556 million by 4.4%. However, the top line witnessed a marginal increase from the year-ago quarter’s $532 million. First Solar has withdrawn its 2020 guidance, given the uncertainty regarding the severity and duration of the COVID-19 pandemic. Shares suffered due to mixed results.

Inside ENPH Earnings

Enphase Energy reported first-quarter 2020 adjusted earnings of 38 cents per share, which surpassed the Zacks Consensus Estimate of 32 cents by 18.8%. The bottom line also soared 375% year over year. Including one-time adjustments, the company posted GAAP earnings of 50 cents per share compared with 2 cents in the year-ago quarter. Enphase Energy’s first-quarter revenues of $205.5 million beat the Zacks Consensus Estimate of $204 million by 0.7%. The top line surged 105.2% year over year. However, the company’s Q2 revenue guidance fell shy of the Zacks Consensus Estimate.

Will the Solar ETF Continue to Shine?

The fund should gain further as it invests as much as 9.89% in ENPH followed by 8.99% in SEDG. The laggard of this earnings season -- FSLR -- holds 8.28% of the fund. Since the fund is heavily weighted on the outperformers and the operating backdrop is in its favor, we can expect the rally in TAN to continue in the coming days.

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