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SunPower (SPWR) Up 0.5% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for SunPower (SPWR). Shares have added about 0.5% in that time frame, underperforming the S&P 500.

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

SunPower Q2 Loss Narrower Than Expected, Revenues Beat

SunPower Corp. incurred an adjusted loss of 22 cents per share in second-quarter 2020, narrower than the Zacks Consensus Estimate of a loss of 42 cents. The adjusted loss in the quarter was in line with the year-ago quarter’s loss.

Excluding one-time adjustments, the company registered GAAP earnings of 11 cents per share compared with the prior-year quarter’s earnings of 75 cents.

Operational Results

During the quarter under review, SunPower’s adjusted revenues came in at $352.9 million, surpassing the Zacks Consensus Estimate of $315 million by 12%. However, the top line declined 19.1% from the year-ago quarter’s $436.3 million.

The year-over-year decline can be primarily attributed to decreased revenues from SunPower Energy Services and SunPower Technologies.

Total operating losses in the quarter were $37.6 million against an operating income of $66.2 million reported in the year-ago quarter. Total operating expenses amounted to $59.2 million during the second quarter.

Financial Position

SunPower had cash and cash equivalents of $235.3 million as of Jun 28, 2020, compared with $423 million as of Dec 29, 2019.

Long-term debt was $92.7 million as of Jun 28, 2020, compared with $113.8 million as of Dec 29, 2019.

In the first half of 2020, net cash inflow from operating activities totaled $20.7 million against the cash outflow of $81.1MILLION in the first half of 2019.

Q3 Guidance

For third-quarter 2020, the company expects to generate adjusted revenues of $360-$400 million. The Zacks Consensus Estimate for full-year revenues stands at $376.50 million, below the midpoint of the company-projected view.

Adjusted gross margin is estimated to be 0-6%. Additionally, it anticipates deployments of 500-560 MW in the same period.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

VGM Scores

Currently, SunPower has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, 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 B. 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, SunPower has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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