Solar ETF Shining On Solid Q3 Earnings

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The solar industry, which is under pressure this year due to the supply crunch in global chips and rising panel prices, is shining brightly of late on rounds of upbeat earnings. The solar market has been outperforming, gaining 14.7% over the past month compared with gains of 6.5% for the S&P 500. The pure-play Invesco Solar ETF (TAN - Free Reporthas risen about 14.8% in a month.

Of the 60% of solar companies that have reported so far, 50% came up with an earnings beat. Additionally, the 26th Conference of Parties at Glasgow added to the strength. This summit aims to lower emissions of greenhouse gas and tackle global warming.

We have highlighted the earnings of some stocks that are among the top five holdings in Invesco Solar ETF. These include Enphase Energy (ENPH - Free Report)SolarEdge Technologies (SEDG - Free Report)Sunrun (RUN), and First Solar FSLR - Free Report).

TAN in Focus

Invesco Solar ETF offers global exposure to the solar industry by tracking the MAC Global Solar Energy Index, holding 53 stocks in the basket. It is moderately concentrated on components, with each making up for not more than 13.1% of the assets. American firms hold 55.3% of the fund’s portfolio, followed by China (16.8%) and Spain (6.2%).

Invesco Solar ETF has amassed $4 billion in its asset base and trades in a solid volume of around 1.4 million shares a day. It charges investors 69 bps in fees per year. Invesco Solar ETF has a Zacks ETF Rank #3 (Hold) with a High-risk outlook.

Let’s take a look at the individual quarterly reports:

Solar Earnings in Focus

Enphase Energy reported better-than-expected earnings. Adjusted earnings of 60 cents per share surpassed the Zacks Consensus Estimate of 47 cents and increased 100% from the year-ago earnings of 30 cents. Revenues soared 96.9% year over year to $351.5 million and edged past the consensus mark of $344.9 million. Enphase Energy takes the top spot, accounting for a 13.1% share in the fund’s basket.

SolarEdge Technologies also reported robust results. It posted earnings of $1.45 per share, outpacing the Zacks Consensus Estimate of $1.38 and improving 19.8% from the year-ago earnings. Revenues jumped 56% year over year to $526.4 million but missed the consensus mark of $338.1 million. SolarEdge takes the second spot with an 11.4% allocation.

Sunrun topped on both the fronts. It reported earnings of 11 cents per share, beating the Zacks Consensus Estimate of 5 cents per share. Sunrun’s earnings however declined from 28 cents reported in the year-ago quarter. Revenues of $438.8 million exceeded the consensus mark of $406 million and were above the year-ago quarter of $209.8 million. Sunrun occupies the third position with a 7.1% share in TAN portfolio.

First Solar reported disappointing results, missing both revenue and earnings estimates. Earnings per share of 42 cents lagged the Zacks Consensus Estimate by 21 cents and declined 71% from the year-ago earnings. Revenues slid 37.1% year over year to $584 million and fell short of the estimate of $699 million. First Solar occupies the fourth position with 6.9% of assets.

Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any ...

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