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SunPower Corp. (NASDAQ: SPWRA)

SunPower Corp. (SPWRA) engages in the design, manufacture and delivery of high-performance solar electric systems worldwide for residential, commercial and utility-scale power plant customers.  The Company’s high-efficiency solar cells and solar panels generate up to 50% more power than conventional solar technologies and have a uniquely attractive, all-black appearance. SPWRA operates in two segments: Components, which sells solar power products, including solar cells, solar panels and inverters, which convert sunlight to electricity for the utility networks serving installers and resellers for use in residential and commercial applications, as well as products for use in multi-megawatt solar power plant applications; and Systems, which offers power systems and system technologies, which include development, engineering and procurement of permits and equipment, as well as construction management, access to financing, monitoring, and maintenance services, serving commercial and governmental entities, investors, utilities, production home builders and home owners.

 

Founded in 1985, the Company is headquartered in San Jose, Calif., and has offices in North America, Europe, Australia and Asia.

 

Share Statistics (15-Dec-09)			FY 2007	FY 2008	% Chg	Q3 2008	Q3 2009	% Chg
Symbol	SPWRA	Revenue, $Mn	774.79	1,435	85.2%	377.50	466.31	23.5%
Current price	$24.12	Gross marg.	19.1	25.3	620 b.p.	27.9	19.1	-880 b.p.
52wk Range:	19.70-46.30	Oper. margin	–	8.6	–	11.4	7.4	-400 b.p.
Avg Vol (3m):	2,527,630	Net margin	1.2	6.4	520 b.p.	6.5	2.8	-370 b.p.
Market Cap.	2.34B
Dil. Shares Outst.	54.94M	EPS, $	0.34	1.13	232.4%	0.29	0.13	-55.2%

Source: Reuters.com, SEC Filings

 

 

Financial Summary

Year on year, SPWRA grew revenues 85.20% from $774.79 million to $1.43 billion while net income improved 902.97% from $9.20 million to $92.29 million. Last year, the Company’s cash reserves fell by$82.88 million. However, it earned $153.65 million from its operations for a Cash Flow Margin of 10.71%. The Company also generated $93.38 million cash from financing while $325.79 million was spent on investing.

For fiscal year 2009, the Company expects the following total company GAAP results: revenue of $1.425 billion to $1.50 billion and net income per diluted share of $0.50 to $0.60. GAAP earnings per share guidance for 2009 includes a $0.21 per share one-time, non-taxable gain related to the Company’s second-quarter 2009 capital raise and approximately $0.13 per share for non-cash charges related to the Company’s adoption of new accounting guidance.

 

Consensus Estimates Analysis

 

	# of Estimates	Mean	High	Low	1 Year Ago
SALES (in millions)
Quarter Ending Dec-09	31	491.06	534.00	449.50	582.65
Quarter Ending Mar-10	29	433.61	566.10	250.00	560.10
Year Ending Dec-09	31	1,469.15	1,511.70	1,427.20	2,004.01
Year Ending Dec-10	33	2,053.67	2,413.80	1,800.00	2,590.27
EARNINGS (per share)
Quarter Ending Dec-09	27	0.48	0.59	0.34	0.87
Quarter Ending Mar-10	23	0.35	0.57	0.12	0.91
Year Ending Dec-09	28	1.16	1.30	0.54	2.92
Year Ending Dec-10	28	1.80	2.69	0.98	4.00
LT Growth Rate (%)	11	29.11	50.00	15.00	35.70

Source: http://www.reuters.com/finance/stocks/financialHighlights?symbol=SPWRA.O

 

Financial Strength

	Company	Industry	Sector	S&P 500
Quick Ratio (MRQ)	1.76	1.15	1.72	0.92
Current Ratio (MRQ)	2.18	1.33	2.03	1.09
LT Debt to Equity (MRQ)	43.17	10.23	18.35	124.64
Total Debt to Equity (MRQ)	56.84	15.52	29.18	185.50
Interest Coverage (TTM)	9.67	0.02	0.36	25.18

Source: http://www.reuters.com/finance/stocks/financialHighlights?symbol=SPWRA.O

Analyst Consensus

Analysts polled by Thomson Reuters rate shares of SPWRA a “Hold.”

 

1-5 Linear Scale	Current	1 Month Ago	2 Month Ago	3 Month Ago
(1) BUY	8	12	9	7
(2) OUTPERFORM	2	4	6	6
(3) HOLD	20	15	15	16
(4) UNDERPERFORM	2	2	2	2
(5) SELL	2	1	1	2
No Opinion	0	1	1	1
Mean Rating	2.65	2.29	2.39	2.58

Source: http://www.reuters.com/finance/stocks/analyst?symbol=SPWRA.O

Investment Highlights

SPWRA is a vertically integrated solar products and services company that designs, manufactures and markets high-performance solar electric power technologies. Its solar cells and solar panels are manufactured using proprietary processes, and its technologies are based on more than 15 years of research and development.

The Company believes its solar cells have the highest conversion efficiency, a measurement of the amount of sunlight converted by the solar cell into electricity. The Company’s product, A-300 solar cell is a silicon solar cell with a specified power value of 3.1 watts and a conversion efficiency averaging between 20% and 21.5%. It delivers 3.3 watts with a conversion efficiency of up to 22.7%. The solar cells are designed without highly reflective metal contact grids or current collection ribbons on the front of the solar cells. This feature enables its solar cells to be assembled into solar panels. Solar panels are solar cells electrically connected together and encapsulated in a weatherproof package.

Through its Components business segment, SPWRA sells solar power products, including solar cells, solar panels and inverters, which convert sunlight to electricity for the utility networks serving installers and resellers for use in residential and commercial applications, as well as products for use in multi-megawatt solar power plant applications. Through its Systems segments, the Company offers power systems and system technologies, which include development, engineering and procurement of permits and equipment, as well as construction management, access to financing, monitoring and maintenance services, serving commercial and governmental entities, investors, utilities, production home builders and home owners.

Recent Developments: The Company had launched the most powerful solar tacker for power plant applications at this year’s Solar Power International conference, held last October 27. T20 Tracker for power plant applications incorporates the Company’s  high-efficiency 128-cell, 400-watt solar panels for maximum energy output.  “The superior design of the latest SunPower T20 Tracker evolves from our experience in deploying more than 200 megawatts of solar photovoltaic (PV) tracking systems worldwide,” stated SPWRA CEO Tom Werner in a Company press release. “This tracker is at the core of SPWRA’s advanced PV power plant technologies which deliver the lowest levelized cost of energy for utility power plants today.”  The Company will reportedly begin constructing power plant projects using the new T20 Tracker beginning in early 2010.

Also in October, SPWRA announced it has produced a world-record solar panel with a 20.4% total area efficiency, which prototype was successfully developed using funds provided by the U.S. Department of Energy (DOE) under its Solar America Initiative (SAI), which was awarded to SPWRA approximately two years ago. It expects to make the 20.4% efficiency solar panel commercially available within the next 24 months, and plans to begin operating a U.S. panel manufacturing facility in 2010 using automated equipment designed and commercialized with SAI funding.

In its annual report for 2008, the Company had stated that its success in developing SPWRA’s brand through a unique channel strategy is based on its differentiated technology, which is currently focused in three areas: high-efficiency solar cells, high-energy collection systems and high-visibility systems monitoring.

Market Outlook: According to a recent report by SolarBuzz, solar energy demand has grown at about 30% per annum over the past 15 years. Meanwhile, worldwide photovoltaic (PV) installations increased by 5,948 megawatts (MW) in 2008, up from 2,826 MW installed during the previous year. Solarbuzz research revealed that the U.S. market grew to 357 megawatts in 2008, with Spain as the largest market in during that year. The Asia Pacific, European and United States PV markets all are reportedly projected to have strong growth over the next five years.

SPWRA remains “positive on the long-term fundamentals of the solar energy industry and sees increased worldwide demand as many countries look for ways to reduce their carbon footprint and dependence on fossil fuels for their energy needs.”

Recent News: On December 16, SPWRA announced it has made significant progress in its internal investigation of unsubstantiated accounting entries previously announced on November 16, 2009. According to the Company, its probe into unsubstantiated accounting entries related to its manufacturing operations in the Philippines is “consistent with the preliminary findings.” SPWRA shares were lifted on the investigation update.

Source: SPWRA 2008 Annual Report

 

Technical Analysis

 

Source: http://stockcharts.com/h-sc/ui

 

As of last close on December 15, 2009, SPWRA closed at $24.12, 22.44% above the 52 week low of $19.70 set on March 17, 2009.

 

SPWRA is trading within its Bollinger Bands.  This is a normal condition and suggests that the stock is neither overbought nor oversold relative to the recent price action.

 

SPWRA’s MACD is currently indicating a weak bullish signal.  Although the MACD is trending above the signal line, the indicator is still below 0, which suggests that the underlying moving averages are bearish.

 

SPWRA on Friday closed above its 13 day moving average.  This is generally considered to an indication of a bullish trend.

 

Comparative Analysis

 

Company Name	Ticker	Price per	Mrkt. Cap.	P/E		P/S
Dec-15-2009	symbol	Share, $	$ Mn	2009	2010	2009	2010
Yingli Green Energy Hold. Co. Ltd. (ADR)	YGE	15.32	2,270	–	20.16	2.23	1.77
Evergreen Solar Inc.	ESLR	1.49	309.67	–	–	1.14	0.87
First Solar Inc.	FSLR	138.99	11,830	18.98	21.32	5.92	4.93
Suntech Power Holdings Co. Ltd.	STP	17.90	3,200	57.74	27.97	2.06	1.64
Energy Conversion Devices Inc.	ENER	11.29	516.45	–	–	2.10	1.38
JA Solar Holdings Co. Ltd. (ADR)	JASO	5.76	929.83	–	23.04	1.86	1.31
Solarfun Power Holdings Co. Ltd. (ADR)	SOLF	7.37	398.42	–	12.71	0.72	0.62
Median				–	21.32	2.06	1.38
SunPower Corp.	SPWRA	24.12	2,340	20.1	13.47	1.59	1.15

Source: Thomson Financial

Insider Trading Activity

 

NET SHARES PURCHSE ACTIVITY Inside Purchases – Last 6 Months
	Shares	Transaction
Purchases	n/a	0
Sales	67, 607	15
Net Shares Purchased (Sold)	(67, 607)	15
Total Insider Shares Held	3.07M	n/a
% Net Shares Purchased (Sold)	(2.2%)	n/a

 

 

Net Institutional Purchases — Prior Qtr to Latest Qtr
	Shares
Net Shares Purchased (Sold)	(16, 137, 000)
% Change in Institutional Shares Held	(18.09%)

Source: Yahoo Finance

 

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