One Reason Why SunEdison (SUNE) Stock Is Up Today

SunEdison (SUNE) shares are higher after the company's announcement of a new 2.9 MW solar power plant that will power Bloomberg's data center.
By Lindsay Ingram ,

NEW YORK (TheStreet) -- Shares of SunEdison (SUNE) were gaining 3.6% to $7.57 on Monday after the solar energy company announced it signed a power purchase deal with Bloomberg to power the news organization's data center.

SunEdison will build a 2.9 MW solar power plant to power Bloomberg's Rockland County, NY-based data center, the company said. The plant is expected to offset more than 5% of the data center's electricity usage annually.

The solar energy company expects to complete construction of the power plant in the fourth quarter of 2016. SunEdison Services will operate and maintain the power plant following its completion.

"We're delighted to work with an industry leader like Bloomberg to help them save money while advancing their sustainability initiatives," Steve Raeder, SunEdison's regional general manager of its Eastern U.S. solar business said in a statement. "And, because we've installed thousands of systems, we know how to do it quickly and cost effectively."

TheStreet Ratings team rates SUNEDISON INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

We rate SUNEDISON INC (SUNE) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 541.5% when compared to the same quarter one year ago, falling from -$41.00 million to -$263.00 million.
  • The debt-to-equity ratio is very high at 16.97 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, SUNE has a quick ratio of 0.69, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has significantly decreased to -$596.00 million or 658.26% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 55.58%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 323.80% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • SUNEDISON INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, SUNEDISON INC reported poor results of -$4.41 versus -$2.39 in the prior year. This year, the market expects an improvement in earnings (-$3.31 versus -$4.41).
  • You can view the full analysis from the report here: SUNE
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