The solar industry has been on fire lately on the presumptive Democratic presidential candidate Joe Biden’s push for clean energy and infrastructure plans. Biden aims to pump $2 trillion into green energy over four years to build solar panels, charging stations and more (read: “Build Back Better” Plan of Biden to Boost These ETFs).
A Biden presidency is touted to spur tens of thousands of new wind turbines and millions of new solar panels across the United States to rapidly scale up zero-carbon energy. Other than this, a slew of better-than-expected earnings added to the industry’s strength.
Invesco Solar ETF TAN touched new record highs on these factors. The ETF has soared nearly 24% in a month.
TAN in Focus
This ETF offers global exposure to the solar industry by tracking the MAC Global Solar Energy Index, holding 27 stocks in the basket. It is moderately concentrated on components with each making up for not more than 9.1% of the assets. American firms dominate with half of the the fund’s portfolio, followed by China (23.7%) and Spain (7.2%). The product has amassed $1.1 billion in its asset base and trades in a solid volume of around 466,000 shares a day. It charges investors 71 bps in fees per year and has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: Top and Flop ETFs to Start Third Quarter).
We have highlighted earnings of some stocks that have led to soaring prices for TAN. Let’s take a look into the individual quarterly reports:
Solar Earnings in Focus
First Solar FSLR reported better-than-expected earnings. Earnings per share of 35 cents beat the Zacks Consensus Estimate by 10 cents and were well above the year-ago loss of $18 cents. Revenues climbed 9.8% year over year to $642 million and edged past the estimate of $527 million. The stock occupies the fourth position with 7.3% of assets.
SolarEdge Technologies SEDG also topped on both counts. It posted earnings of 70 cents per share, surpassing than the Zacks Consensus Estimate of 44 cents and improving 3.2% from the year-ago earnings. Revenues inched up 2.1% year over year to $331.9 million and came well ahead of the consensus mark of $322 million. SolarEdge takes the top spot with 9.1% allocation (read: Blue Wave to Hit America? Sector ETFs to Win or Lose).
Enphase Energy ENPH reported adjusted earnings of 17 cents per share, which surpassed the Zacks Consensus Estimate of 14 cents but declined 55.3% from the year-ago earnings of 38 cents. Revenues dropped 6.4% year over year to $125.5 million but edged past the consensus mark of $124 million. The company takes the third spot, accounting for 7.6% share in the fund’s basket.
SunPower Corp. SPWR posted loss of 22 cents per share, narrower than the consensus estimate of loss of 42 cents. The adjusted loss was in line with the year-ago quarter’s loss. Revenues came in at $352.9 million, down 19.1% from the year-ago quarter and above the Zacks Consensus Estimate of $315 million. The stock occupies the seventh position with 4.2% share in TAN.
Canadian Solar CSIQ also topped estimates on both earnings and revenues. The company posted earnings per share of 9 cents on revenues of $696 million. Though earnings per share declined 91.3% from the year-ago quarter, it beat the Zacks Consensus Estimate of break-even earnings. Revenues of $696 million came in below the year-ago quarter revenues of $1.0 billion but were above the consensus mark of $661 million. Canadian Solar is the tenth firm making up for 4% of TAN portfolio (see: all the Alternative Energy ETFs).
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