A month has gone by since the last earnings report for SolarEdge Technologies (SEDG). Shares have added about 3.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is SolarEdge 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.
SolarEdge Q1 Earnings Beat Estimates, Revenues Rise
SolarEdge reported first-quarter adjusted earnings of $1.20 per share. The bottom line improved by 22.4% from the prior-year quarter’s earnings of 98 cents per share.
The Zacks Consensus Estimate for the first quarter was pegged at 80 cents per share.
Barring one-time adjustments, the company posted GAAP earnings of 60 cents per share compared with 55 cents in the year-ago quarter.
Revenues
SolarEdge’s revenues of $655.1 million in the first quarter surpassed the Zacks Consensus Estimate of $635 million by 3.2%. The top line surged 62% from the year-ago quarter’s $405.5 million.
Revenues from the solar segment were $608 million, up 62% from $376.4 million in the prior-year quarter.
Operational Highlights
SolarEdge shipped a total of 2.13 gigawatts of inverters in the reported quarter.
The adjusted gross margin contracted by 810 basis points from the prior-year gross margin of 36.5% to 28.4%.
Adjusted operating expenses went up 30% year over year to $98.9 million.
The adjusted operating income in the quarter totaled $87.2 million, up 21% from the year-ago quarter’s $71.9 million.
Financial Performance
SolarEdge had $1002.8 million of cash and cash equivalents as of Mar 31, 2022, up from $530.1 million as of Dec 31, 2021.
Cash outflow from the operating activities amounted to $163 million in the first quarter against the cash inflow from the operating activities of $24.1 million in the year-ago period.
Total long-term liabilities were $1,103.6 million as of Mar 31, 2022 compared with $1,056.8 million as of Dec 31, 2021.
Q2 Guidance
In the second quarter of 2022, SEDG expects revenues in the range of $710-$740 million. The Zacks Consensus Estimate for the same is pegged at $670 million.
Revenues from the solar segment in the second quarter are projected in the range of $660-$690 million.
While the company’s adjusted gross margin is estimated at 26-29%, the gross margin in the solar segment is anticipated at 28-31%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -10.28% due to these changes.
VGM Scores
Currently, SolarEdge has a poor Growth Score of F, however its Momentum Score is doing a lot better 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 F. 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, SolarEdge has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
SolarEdge belongs to the Zacks Solar industry. Another stock from the same industry, Enphase Energy (ENPH), has gained 6.7% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.
Enphase Energy reported revenues of $441.29 million in the last reported quarter, representing a year-over-year change of +46.2%. EPS of $0.77 for the same period compares with $0.56 a year ago.
Enphase Energy is expected to post earnings of $0.80 per share for the current quarter, representing a year-over-year change of +50.9%. Over the last 30 days, the Zacks Consensus Estimate has changed +1%.
Enphase Energy has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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