Is Solar Stock Solaredge A Buy After Big Stock Drop?

Solar Energy Stock Solaredge dropped 20% on Monday morning. Now a lot of this volatility is due to the presidential elections. But for Solaredge their drop was primarily caused by a decrease in revenue. So I want to focus on Solaredge in this video but I also want to talk about Enphase, Jinko solar, and Canadian solar to give you guys a bigger picture of what is happening here. But with Solaredge, even though they posted disappointing 3rd quarter results it is not all bad news. And there is definitely some good news in Solaredges earnings report. So in this video I want to share the main takeaways from that earnings report and then I want to give you my recommendation on whether you should buy Solaredge now or wait.

Solaredge advanced nearly 300% from November 4th of last year before suffering a 32% drop over the past couple of weeks. Looking at the Non-GAAP financial results we can see Solaredge reported 338.1 million in revenue. Which is higher revenue than last quarter but is still well below pre pandemic numbers. So clearly the pandemic is still hurting Solaredges businesses. However the silver lining is that it looks like their revenue is starting to trend up. Next, gross margins remained strong at 33.5%. And net income was a very solid $65.9 million dollars. What this all means is that despite a big reduction in revenue, Solaredge actually still managed to report earnings per share of $1.21. Which matches their earnings per share from a year ago.

In order to make sense of these numbers, we have to separate Solaredge’s commercial solar business from their residential solar business. Early on in the pandemic, there was the expectation that commercial solar installations would rebound faster than residential installations. However, this is not what has happened. In fact, residential has rebounded a lot faster than commercial has. One of the other things that is really helping solaredge stock is European demand. This quarter, Solaredge saw record demand in Europe with 165 million in solar related revenues. And this was up from 144 million in solar revenue last quarter. Strong demand in Europe came from the Netherlands and Germany as well as smaller markets such as France, Poland, and Switzerland. Which they said all reported record revenues. So the growth in the European markets has been an encouraging sign for solaredge stock this quarter.

When it comes to North America sales, the picture is not quite as bright but it is not necessarily bad either. While revenues did not increase from last quarter, Solaredge did experience big jumps in installation rates from august to September with 22% and 40% sell through jumps in residential and commercial respectively. What this means is that Solaredge expects 50% growth in residential sales in North America in the fourth quarter.

One of the strongest points the bears are making when it comes to Solaredge stock are future growth rates. Solaredge’s anticipated growth rates for the fourth quarter are behind anticipated growth rates for other solar stocks. We can see in this table that the year over year growth rates for Q4 are negative for Solaredge but are positive for other solar stocks such as Enphase, Jinko solar, and Enphase. And I will agree that this is a troubling sign for Solaredge stock. Something else that bears are bringing up is increased competition in the European markets. As we already saw, Solaredge experienced huge growth in Europe. But over the past few years, Chinese solar inverter companies like Sungrow have been growing rapidly and expanding into the European markets. And Sungrow actually surpassed Solaredge last year in total revenue. In addition to Sungrow, Canadian solar has started expanding into the solar inverter market and Huawei, earlier this year signed a 5 Gigawatt inverter deal in Europe. Which to give you some perspective on how significant this is, Solaredge shipped 2.5 gigawatt of inverters to Europe in 2019.

Based on these numbers it looks like Enphase might be the better investment. They have the highest revenue growths right now in the solar inverter market and they are continuing to gain market share in the US compared to Solaredge. And with California requiring solar panels on all new homes being constructed, I think Enphase could overtake Solaredge in the US inverter market. Also canadian solar and jinko solar have posted impressive revenue gains quarter over quarter and therefore they might be worth looking at buying on the dip.

Видео Is Solar Stock Solaredge A Buy After Big Stock Drop? канала Justin Scott