SunPower is up 1.7% to $28 in pre-market trading today.
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The firm cites the solar panel manufacturer's top position in the U.S. market and burgeoning international market share as reasons for the positive rating.
"Our estimates factor in what we consider to be conservative revenue growth assumptions and modest improvements in profitability. We see potential upside to our projections, and consider valuation compelling at current levels... our view is that the equity doesn't fully reflect both the underlying improvements in end markets and profitability," the firm stated.
Separately, TheStreet Ratings team rates SUNPOWER CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate SUNPOWER CORP (SPWR) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- SUNPOWER CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, SUNPOWER CORP turned its bottom line around by earning $0.57 versus -$3.01 in the prior year. This year, the market expects an improvement in earnings ($1.20 versus $0.57).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 115.4% when compared to the same quarter one year prior, rising from -$144.77 million to $22.34 million.
- SPWR, with its decline in revenue, slightly underperformed the industry average of 1.5%. Since the same quarter one year prior, revenues slightly dropped by 6.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The gross profit margin for SUNPOWER CORP is rather low; currently it is at 24.40%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, SPWR's net profit margin of 3.50% is significantly lower than the industry average.
- Net operating cash flow has significantly decreased to $32.88 million or 86.40% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full analysis from the report here: SPWR Ratings Report