Story updated at 10 a.m. to reflect market activity.
Shares of SolarCity were falling -1.2% to $74.69 in morning trading.
The analyst firm reiterated its "overweight" rating for the solar energy company. SolarCity is seeing a higher percentage of retained payments, and is cutting costs according to JPMorgan analysts.
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Separately, TheStreet Ratings team rates SOLARCITY CORP as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate SOLARCITY CORP (SCTY) a SELL. This is driven by some concerns, 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 poor profit margins, weak operating cash flow, generally high debt management risk and feeble growth in its earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for SOLARCITY CORP is rather low; currently it is at 23.27%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -37.86% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$23.31 million or 361.94% 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 debt-to-equity ratio of 1.15 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, SCTY has managed to keep a strong quick ratio of 1.75, which demonstrates the ability to cover short-term cash needs.
- SOLARCITY CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, SOLARCITY CORP reported poor results of -$0.79 versus -$0.56 in the prior year. For the next year, the market is expecting a contraction of 389.9% in earnings (-$3.87 versus -$0.79).
- Compared to other companies in the Electrical Equipment industry and the overall market, SOLARCITY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: SCTY Ratings Report