Real Goods Solar ( RSOL) is now a public company, and the markets have spoken: The freshman Nasdaq stock is looking more like So-So Solar.

Unlike most solar stocks, which make photovoltaic cells or the panels that include them, Real Goods Solar focuses on the consumer -- selling, installing and maintaining solar panels on the roofs of homes and small businesses.

Solar panel stocks like First Solar ( FSLR) and SunPower ( SPWR) have been volatile as investors grapple with their high valuations at a time when supply and demand -- and therefore pricing -- seem uncertain.

Still, when the price of oil seems to charge toward yet another new record nearly every day, you'd expect a friendly welcome for a stock that offers a different take on the technology.

Investors didn't think so. Last month, Real Goods Solar said it would go public between $10 a share and $12 a share. Last Thursday, it priced at the bottom of that range. And since then, it's fallen steadily, dropping as low as $7.25 Monday afternoon, or 28% below its offering price.

The stock was trading at $7.90, down 3 cents, or 0.38%, in recent trading on Tuesday.

There are things to like about Real Goods Solar. It sells a product that appeals to high-income consumers in California (the company also has plans to expand along the West Coast and in New England). The company says it's made 2,400 residential and commercial installations in its 30 years of business, which it believes makes it the biggest player in its niche.

The market is fragmented and ripe for consolidation. Most solar panel installers are small, independent operations, with more than 300 in California alone. Real Goods has bought 250 of them, including two of its biggest deals in the past seven months: Marin Solar and Carlson Solar, both acquired for $3.2 million apiece.

Real Goods says it's evaluating another 15 takeover candidates with annual revenue between $3 million and $30 million. Once these companies are integrated, executives said in the company's roadshow, margins should fatten up a bit.

Profit margins are one of the things that must be concerning investors in Real Goods Solar: They are razor thin, leaving the stock with a perilously high valuation.

Real Goods Solar has posted a net loss in three of its last nine quarters (including the most recent one); and of the other six quarters, its net profit totaled between zero and three cents a share. As a result, the company posted a net profit of 3 cents a share in 2006 and one cent a share in 2007.

Based on the initial offering price, the stock was valued at 333 times 2006 earnings and 1,000 times 2007 earnings. And that's counting the pre-IPO shares outstanding of 10 million. If you factor in the 15.5 million shares post offering, the valuation is even higher.

One of the recent acquisitions, Carlson Solar, had a $1 million profit last year, so that could bump up Real Goods' earnings this year. Factoring in Carlson and Marin Solar, Real Goods had a pro-forma net profit of 5 cents a share last year. But that's still a PE ratio of 200 based on the offering price, and 159 based on the stock at Monday's close.

And it isn't getting off to a great start this year, profit-wise. In its most recent prospectus, Real Goods Solar said, "During the quarter ended March 31, 2008, we preliminarily estimate our net revenue to be approximately $6.5 million and our net loss to be between $300,000 and $350,000."

Investors might also recall Real Goods from its last appearance in the public markets -- especially those familiar with the Nasdaq bulletin board stocks in the late 1990s. That's was the stomping grounds for Real Goods Trading Co., where it went from a high of $6 in early 1999 to $3.25 in late 2000.

In October 2000, Gaiam ( GAIA) agreed to buy Real Goods Trading Co. for $8.7 million. Shareholders of RGTC stock got one Gaiam share for every 10 of their own (Gaiam's stock was worth about $16 a share at the time), plus a gift certificate worth up to $100 of Gaiam's "green living" products.

Under Gaiam, Real Goods grew through acquisitions, borrowing $20 million from its parent, which the proceeds of this IPO will help to repay. Gaiam's stake in Real Goods is currently worth about $79.3 million, or more than nine times the value of Real Goods Trading when Gaiam bought it seven years ago.

So Gaiam is the big winner in Real Goods' IPO. Also coming out ahead is Real Goods itself, raising $55 million in a dodgy IPO market with a ludicrous valuation. DODGY???

And investors in the IPO? Until Real Goods starts delivering on its pledge to push up profit margins, they are likely to grow increasingly disenchanted with the price of the stock.