This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

SolarCity Outshining Rivals Ahead of 2Q Earnings

Stocks in this article: SCTY FSLR TSLA HMC GOOG USB GS BAC

NEW YORK ( TheStreet) -- SolarCity (SCTY - Get Report), which recently surpassed the $3 billion market cap milestone, reports earnings after the close Wednesday. Along with monitoring the solar energy provider's second-quarter results, investors will be carefully looking for guidance from management about the remainder of the year.

SolarCity was slipping 2.5% to $44.03 in Tuesday afternoon trading, trimming the stock's meteoric 451% advance since its December initial offering. Analysts are expecting the company to post a loss of 38 cents a share on revenue of $27.44 million, according to a consensus estimate at Yahoo! Finance. For its first quarter of 2013, the company posted a loss of 41 cents a share on $30 million in revenue.

Solar stocks have been performing well recently in anticipation of solid earnings from SolarCity and First Solar (FSLR - Get Report). But where First Solar's results rely almost entirely on prices of solar panels and quantities sold in competition with Chinese manufacturers, among others, SolarCity's business actually benefits if solar panel prices drop.

An article in The Economist in November saw the huge potential in solar generally:

... it is in the field of solar energy, currently only a quarter of a percent of the planet's electricity supply, but which grew 86% last year, that the biggest shift of attitude will be seen, for sunlight has the potential to disrupt the electricity market completely.

According to that article, the cost to manufacture silicon voltaic cells per watt has dropped from $76 in 1977, to 74 cents today and will likely continue to fall as manufacturing increases and manufacturing technology improves.

SolarCity doesn't make panels. They buy them. The company's business model is to install solar systems for business and residences and lease its products to customers. CEO Lyndon Rive described SolarCity as "an energy company" in a March interview with Adam Lashinsky on CNNMoney.

"We sell you electricity," he is quoted as saying. "Your utility does exactly the same thing. What they do is they build that infrastructure, they go out and arrange financing beyond the infrastructure and then sell you per kilowatt hour. But you don't think of your utility company as a financing company."

If solar array costs drop, SolarCity can either increase its profit margin or lower customer rates to make it more competitive with traditional utilities.

SolarCity has secured a number of large-scale contracts recently, including a partnership with Honda (HMC) to create green electricity outlets for their electric car customers. SolarCity is also currently building its first utility-scale project for the Kaua'I Island Utility Co-operative (KIUC), a 12 megawatt plant that presumably will be installed and leased to KIUC who then sell the energy to its customers. The plan is for it to provide 6% of the island's total energy needs (68,000 inhabitants, one article says).

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,164.95 -251.90 -1.45%
S&P 500 1,994.99 -26.26 -1.30%
NASDAQ 4,635.24 -48.1670 -1.03%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs