NEW YORK (TheStreet) -- Shares of SolarCity Corp. (SCTY) are higher by 4.22% to $52.41 in early market trading Thursday, after the company partnered with Bank of America (BAC) to finance about $400 million in solar power projects throughout 2014 and 2015.
The new financing agreement will allow thousands of homeowners to install solar panels without upfront costs, and pay less for solar electricity than they currently pay for utility power.
"The new residential program follows Bank Of America's prior commitment to finance more than $200 million in commercial solar power projects with SolarCity, and continues the two companies' long-term partnership to deploy clean energy," said SolarCity in a statement.
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SolarCity currently provides one out of every three new residential solar power systems in the U.S.
San Mateo, CA-based SolarCity provides renewable electricity directly to homeowners, businesses and government organizations for less than they spend on utility bills.
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 multiple weaknesses, 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 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:
- Net operating cash flow has significantly decreased to -$22.54 million or 122.53% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Currently the debt-to-equity ratio of 2.00 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Regardless of the company's weak debt-to-equity ratio, SCTY has managed to keep a strong quick ratio of 1.58, 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 -$0.81 versus -$0.56 in the prior year. For the next year, the market is expecting a contraction of 366.7% in earnings (-$3.78 versus -$0.81).
- 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 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.
- In its most recent trading session, SCTY has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
- You can view the full analysis from the report here: SCTY Ratings Report