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Why Has SunPower’s Stock Already Tripled This Year?

SunPower (NASDAQ: SPWR) manufactures and distributes solar power products for installation on residential and commercial units as well as large-scale, utility-sized projects. 2019 has been a great year so far for SunPower, with its stock almost tripling in value, from $5.07 in January to $14.50 in September.

View our interactive dashboard analysis A Look At Why SunPower Has Already Tripled So Far This Year, where we analyze the factors behind this move in SunPower’s stock and what to expect in the near future.

It Has Been A Good Year For The Solar Sector Overall

  • Solar stocks have had a great year so far, as can be seen from the Invesco solar index, which has jumped from $18.79 in January to $31.14 in September, a 66% move.
  • Solar stocks have benefited from strong international demand growth, favorable policy changes, and healthier fundamentals, which have contributed to an overall positive industry sentiment.

A Look At SunPower’s Revenue Trend Over Recent Quarters

  • Broadly, SunPower’s revenue has grown from $398.9 million in Q1 ’18 to $481.9 million in Q2 ’19, which is a quarterly compounded growth of 3.85%.
  • The QoQ drop in revenue for Q1 ’19 was due to the transition to the new, more efficient A-series panels, whose sales have been rapidly picking up since.

Improvement In The SunPower Technologies Segment

  • The segment involves technology development, panel manufacturing, and equipment sales to end-customers outside North America.
  • SunPower had been underperforming in the utility-scale projects space due to competition from independent power producers and smaller players.
  • The company ceased development of large-scale solar power projects in Q3 ’18, selling its remaining power plant development portfolio.
  • This segment had been expected to struggle since, but revenues have picked up as the company has rapidly transitioned from a development model to an end-to-end solutions model, driving revenue to $226.5 million in Q2 ’19, from $164.1 million in Q3 ’18.

Revenue And EBITDA Beat Guidance In Q1 And Q2 2019

  • Revenue and EBITDA numbers beat company guidance for both Q1 and Q2 ’19.
  • Revenue in Q1 ’19 was $411.6 million vs $370 million guidance, and revenue in Q2 ’19 was $481.9 million vs $444 million guidance.
  • Similarly EBITDA for Q1 came in at -23 million vs -30 million and for Q2, 8 million vs 5 million guidance.
  • These numbers helped create a positive outlook, and the company sees similar growth going forward.

Additional details about how MegaWatts Shipped and Total Capacity for SunPower have grown over recent years can be found in our interactive dashboard.

The P/S Ratio Has More Than Doubled In The Past One Year

  • All the above factors, have helped drive up the P/S ratio from 0.57x in 2018 to 1.21x in 2019.
  • The SunPower Technologies segment has picked up again, revenues have beaten company guidance over the past 2 quarters, and the new A-series panels are expected to significantly add to revenue over the next half of 2019.
  • To add to this, net debt has dropped from $1.25 billion to $820 million, since Q3 ’18.
  • These factors have created a positive outlook for the future of SunPower, with investors willing to pay more per dollar of company revenue.

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