The "Shining" Solar Technology Stock Who's 900% Revenue Growth Might Indicate Big Near Term Upside?

• Massive revenue growth of 900% in their last quarter, over the year-ago period, has made Solbright (SBRT) an overlooked but potentially lucrative opportunity. The company provides energy management and solar panel installation services in the Eastern U.S., and after a small 2017 acquisition they are especially poised to capitalize on the growing market for "energy efficiency."

• The stock appears undervalued compared to similar public companies, at a market capitalization of only $10 million, and the stock could be worth a substantial gain based on an analysis of peers. Similar companies typically trade closer to 2X their trailing twelve months of sales - the company has done more than $12 million in that period, meaning it could be worth 150% more than today's prices.

NEW YORK, NY / ACCESSWIRE / May 22, 2018 / Sales have grown substantially at Solbright Group Inc (SBRT), with their latest quarterly earnings report showing a 900% revenue growth figure when compared to the same period one year ago. But investors haven't yet caught on, making an attractive 2018 opportunity.

Solbright Group (SBRT) is going through a major transformation, a result of an acquisition last year that significantly expanded their pipeline of solar panel installation projects. This company is laser focuxed on energy efficiency projects, and the market has yet to catch on to the growth going on, or the fact that this little solar acquisition provides a seamless funnel for the company's long-time technology solutions business. The stock trades at just 1X their last year's sales, and SBRT could double just to reach the same value as similar companies.

Lately, U.S. President Donald Trump has been walking back earlier comments about a trade war with China, the first hint of which came when he announced tariffs on imported solar panels. The solar sector has seen improved price action in the last few months, with companies like Canadian Solar Inc. (CSIQ) and Sunpower (SPWR) moving higher. SBRT could easily join this group as the stock is significantly undervalued based on a peer analysis, and shares in this unknown stock could rally this year as the evolving business blossoms.

Making Businesses More Efficient and Cutting Costs

Solbright provides energy conservation services to facilities, businesses and buildings in the Eastern U.S., including energy consumption assessments and recommendations as well as acting as the general contractor for light-emitting diode retrofits, oil-to-natural gas boiler conversions, and solar panel installations.

Solbright's original and core competency lies in installing and maintaining smart "Internet of Things" (IOT) infrastructure for facilities. The company's proprietary hardware and software systems can be placed on machines, lighting, and HVAC systems to monitor and improve their energy needs and thus expenses. Reducing energy use during "peak" hours (when utility companies may charge more for energy), saves manufacturing facitilies, for instance, considerable money. Like solar panel insallations, the company's services pay for themselves in due time.

Grand View Research projects the market for connected devices, buildings, and cities -- collectively called the "industrial internet of things" -- at being worth almost $2 TRILLION in the next 5 years. Verizon's "The Internet of Things 2015" report indicated that of organizations integrating IoT into their operations, 82% reported increased efficiency and 49% saw enhancements in product quality.

Solbright's business creates a win-win situation for its customers.

2017 Acquisition Paying Off As Revenue and Gross Profits Rise

In the summer of 2017, Solbright acquired a mid-Atlantic solar installation to augment their offerings, which has taken revenue through the roof in the last few quarters.

But what's gone unnoticed is the inherent pipeline of potential new services contracts as a result of this acquisition, which could mean huge growth and improved operating metrics are on the horizon.

Solbright is growing rapidly, and in April 2018 they posted a significant sales increase during their fiscal third quarter over the same period a year ago. Revenue for the third quarter (ended Feb 28, 2018) was $2.496 million, or 900% higher compared to revenue of $263.8K in the third quarter of fiscal year 2017. Gross profit, which takes account of the Costs Of Goods Sold, increased to $0.9 million from $0.2M year over year, an increase of over 430%.

Gross Profits are key here, as they have been improving over the last year as the company fully internalizes their 2017 solar acquisition, and this is the highest Gross Profit in company history!

Most importantly in the long-term, however, is that the solar contracts are also inherrent potential contracts for their high-margin IIoT business. The solar acquisition brought in a $40 million backlog of projects and a substantial pipeline of additional projects throughout the Eastern United States. Converting solar install projects into long-term users of the company's proprietary software and hardware IIOT systems (called Arktic) could mean millions in high-margin revenue for the company, with margins even as high as 80 or 90%.

At 1X Revenue, Stock Could Rise by 100% To Find Fair Value, Not Including Growth Prospects

At less than $10 million in market value, SBRT may be a steal, trading at less than 1X their trailing twelve months of revenue.

SBRT has reported $12.3 million in revenue during the last twelve months, so how do this compare to peers?

Sunrun (RUN) and Vivint Solar (VSLR) are two of the biggest solar installers in the United States. RUN has a public market value of $1.2 billion. In the trailing twelve months, they reported $570 million in sales. Their Price-to-Sales ration is over 2.1! VSLR has a public market capitalization of $480 million, and they had sales of $280M in the last 12 months. Their Price-to-Sales ration is over 1.7X.

At a $10 million market capitalization and $12 million in TTM sales, this metric demonstrates how SBRT could be significantly undervalued - it could be worth $24 million, or more than 2 times today's prices just to reach fair value, and that's not including future growth.

Solbright is on track to have sales of around $12 to $15 million in their fiscal 2018, extrapolating from their last few quarters. A 1.5 to 2.5x Price/Sales multiple could mean a fair value market capitalization based on this 2018 estimate of $18 to $38 million! The company today is valued at just $10 million, implying SBRT may have 2-4x of upside as investors discover this small company! Even at a 1X Price-to-Sales ration, the stock should have 20-30% of upside from recent prices.

This company certainly has risks. It is a micro-cap, which are typically harder to finance, and the company may need to conduct a dilutive financing to keep growing their business. They may also face headwinds in the solar space with the latest U.S. tariffs. This is a high-risk public company, and it could be worth nothing without the right execution.

Solbright could be worth 2X rapidly if investors realize the current price disparity next to other leading solar installlation and contracting companies in the U.S. SBRT could move quickly in 2018, and this is a name that should be on any small-cap investor's watchlist.

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