SolarCity, SCTY: Vertically Integrated Solar Panel Manufacturer, Distributor Stock Hits New Low

Shares of SolarCity Corporation (NASDAQ: SCTY) printed a fresh 52-week low yesterday, after having printed a whole series of new lows over the past two weeks.

On October 29, SolarCity management presented the company’s third quarter 2015 financial results.

The consensus among Wall Street analysts who publish earnings per share estimates for SCTY was for a loss of $1.95. SolarCity management reported a loss of $2.41, 23.6 larger than expected. Revenue was $113.9 million, reportedly at the high end of SolarCity management’s prior guidance. The revenue figure was up 95 percent year-over-year.

Solar panels used by Israeli farmers. Solar panels employed by Israeli farmers. [Photo by Uriel Sinai/Getty Images]Still, the market took the bigger-than-expected EPS number hard. SCTY shares closed regular trading at $38.07 on October 29. On October 30, SCTY shares opened at $30.98 and closed at $29.65, losing 22.1 percent of their value in 24 hours.

SolarCity went public in December 2012 for $8 a share, according to CNN Money. Since then, SCTY stock has returned 230.8 percent. However, over the past 12 months, SCTY shares are down 49.2 percent compared with a gain of 0.8 percent for the Dow Jones Industrial Average (^DJI). Over the past three months, SCTY stock is down 45.8 percent, while the Dow is up 2.0 percent.

Current EPS estimates for SolarCity aren’t very encouraging. A loss of $2.58 is the consensus for the fourth quarter of 2015. A loss of $2.28 is the consensus for the first quarter of 2016, and a loss of $8.09 is the consensus for all of 2015. A loss of $8.66 is the consensus for all of 2016.

SolarCity shares are down sharply. [Stock Chart Courtesy Venngage]These EPS numbers translate to EPS contractions of 94.0 percent this quarter, 50.0 percent next quarter, 108.5 percent for the full 2015-year, and 7.0 percent in 2016. SCTY EPS is expected to fall at an average annual rate of 1.9 percent for the coming five years.

For a company that has quite a dismal profit outlook, SolarCity certainly has strong sales. Third quarter sales were up 95 percent and fourth quarter sales are expected to grow 48.8 percent year-over-year to $106.9 million; sales are expected to grow 66.3 percent to $112.2 million in the first quarter of 2016. For the full 2015-year the consensus for SolarCity revenue is $391.5 million, up 53.5 percent year-over-year. For 2016, the consensus is for revenue of $662.5 million, up 69.3 percent, an acceleration over 2015 growth.

SolarCity has a profit margin of -18.7 percent, an operating margin of -158.9 percent, and a return on equity of -49.4 percent. The company holds $418.4 million in cash and $2.45 billion in debt. SolarCity has a debt to equity ratio of 151.1 percent.

Solar panels used in the desert. [Photo by Uriel Sinai/Getty Images]Wall Street analysts’ EPS estimates for SolarCity have been continuously reduced. The expectation for a loss of $2.58 for the current quarter was for a loss of $2.11 just 90 days ago, an increase of over 22 percent. The first quarter 2016 view of $2.28 was at $2.00 90 days ago. Full-year 2015 EPS estimates of $8.09 have come down 14.1 percent from $7.09 just 90 days ago. Similarly, 2016 EPS estimates have come down 12.5 percent from $7.70 to $8.66 over the past 90 days.

Sixteen brokers provide price targets for SCTY shares. Their targets range from $33 to $90 and average $60.00.

Shares of First Solar, Inc. (NASDAQ: FSLR), Trina Solar Limited (NYSE: TSL), and Canadian Solar (NASDAQ: CSIQ) were each down yesterday as well. First Solar shares traded down 4.3 percent, Trina Solar Shares traded down 5.1 percent, and Canadian Solar shares traded down 3.4 percent.

The Guggenheim Solar ETF (NYSE: TAN), which holds shares of First Solar, Trina Solar, Canadian Solar, and SolarCity traded down 6.1 percent on volume 29 percent above average yesterday.

SolarCity’s financial results included guidance for the fourth quarter that was below the management’s previous guidance.

“This is below the low end of our prior annual guidance as we are cognizant of the inherent uncertainty in the record amount of commercial installations we have planned in December, particularly in light of potential weather-related disruptions and the holiday season,” SolarCity management said in their letter to shareholders.

With the goal of furthering its vertical integration, SolarCity has committed to investing $5 billion in a “gigafactory” in Buffalo, New York, to lower the cost of building more efficient solar panels over the next decade, according to the MIT Technology Review. New York State is reported to be chipping in $750 million with the hope of spurring economic growth in the region.

[Feature Photo by David Becker/Getty Images for National Clean Energy Summit]