Yahoo Finance What's in Store for Solar City (SCTY) this Earnings Season? - Analyst Blog
We expect SolarCity Corp. SCTY to beat expectations when it reports second-quarter earnings on Jul 29, 2015, after the markets close. Last quarter, it posted a positive earnings surprise of 5%. Meanwhile, the company has topped earnings estimates in three of the trailing four quarters with an average beat of 8.66%. Let’s see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that SolarCityis likely to beat estimates because it has the right combination of two key components.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, stands at +1.86%. This is because the Most Accurate Estimate is pegged at a loss of $1.58 per share while the Zacks Consensus Estimate is at a loss of $1.61 per share. This is a meaningful indicator and signifies a likely positive earnings surprise.
Zacks Rank : SolarCity has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), #2 (Buy) and #3, when combined with a positive ESP, have a significantly higher chance of beating earnings. Meanwhile, the Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
The combination of SolarCity’s Zacks Rank #3 and +1.86% ESP makes us confident of an earnings beat.
What's Driving the Better-than-Expected Earnings?
SolarCity is currently pursuing multiple growth ventures and marketing ploys to strengthen its presence across the nation. In the second quarter, the company partnered with Minnetonka-based solar developer Sunrise Energy Ventures to create the largest community solar program in the country. The new community solar program will offer renters, schools, municipalities and other current Xcel Energy XEL customers the benefit of purchasing renewable energy without installing solar panels on their properties.
The California-based company had launched MyPower solar loan offering in Oct 2014 in eight states and subsequently extended this facility to a number of other states. The latest launch was made in Rhode Island and Nevada.
SolarCity continues to intensify its residential business. The company’s installations in the first quarter more than doubled year over year to 139 megawatt. The addition of customers every quarter boosts the top line of the company in the quarters that follow.
Other Stocks to Consider
Other stocks in the solar space that also have the right combination of positive earnings ESP and a favorable Zacks Rank include:
JinkoSolar Holding Co., Ltd. JKS, an Earnings ESP of +27.71% and a Zacks Rank #3.
Vivint Solar, Inc. VSLR, an Earnings ESP of +1.52% and a Zacks Rank #3.
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XCEL ENERGY INC (XEL): Free Stock Analysis Report
JINKOSOLAR HLDG (JKS): Free Stock Analysis Report
SOLARCITY CORP (SCTY): Free Stock Analysis Report
VIVINT SOLAR (VSLR): Free Stock Analysis Report
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