SunPower Corp Stock Downgraded (SPWR)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

NEW YORK ( TheStreet) -- SunPower (Nasdaq: SPWR) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its notable return on equity, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and poor profit margins.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

Highlights from the ratings report include:
  • SUNPOWER CORP's earnings per share declined by 40.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. 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 ($1.31 versus $0.57).
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market on the basis of return on equity, SUNPOWER CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • SPWR, with its decline in revenue, underperformed when compared the industry average of 8.4%. Since the same quarter one year prior, revenues fell by 11.9%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Net operating cash flow has significantly decreased to -$132.04 million or 99.52% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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 27.9% when compared to the same quarter one year ago, falling from $19.57 million to $14.10 million.

SunPower Corporation, an energy services company, designs, manufactures, and delivers solar systems to residential, commercial, and utility customers. It operates in three segments: the Americas, the EMEA, and the APAC. SunPower has a market cap of $4.46 billion and is part of the technology sector and electronics industry. Shares are up 14% year to date as of the close of trading on Wednesday.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

If you liked this article you might like

Trump's Solar Tariff Won't Entice U.S. Investment

Trump's Solar Tariff Won't Entice U.S. Investment

Not Everyone Convinced China to Blame For U.S. Solar Woes

Not Everyone Convinced China to Blame For U.S. Solar Woes

Ignore Solar Stock Run, Trump Tariff May Not Be Good for Anybody but First Solar

Ignore Solar Stock Run, Trump Tariff May Not Be Good for Anybody but First Solar

Trump Administration Imposes Tariffs on Foreign Solar Products, Washing Machines
Dow and S&P 500 Post New Records as Concerns Ebb Over New York Explosion

Dow and S&P 500 Post New Records as Concerns Ebb Over New York Explosion