SolarCity Corp (SCTY) Q1 Earnings: What To Look For

SolarcityBy BrokenSphere (Own work) [CC BY-SA 3.0 or GFDL], via Wikimedia Commons

SolarCity Corp (NASDAQ:SCTY) reports its fiscal first quarter results on Wednesday, May 7 after the bell. The residential solar panel maker issued its first quarter guidance on March 18, when less than two weeks were left in the quarter. So, SolarCity is expected to easily meet or exceed its guidance. The San Mateo-based company forecasts revenues of $50-$56 million and a net loss of 70-80 cents per share.

SolarCity’s panel installations expected to show solid growth going forward

SolarCity Corp (NASDAQ:SCTY) said during its Q4 earnings call in March that it expects systems sales of $23-$27 million and operating lease revenues of $27-$29 million. The company forecasts first quarter operating expenses of $70-$75 million. On the other hand, Wall Street forecasts revenues of $53.39 million with a net loss of 74 cents per share. The Elon Musk-backed company has provided project installation guidance of 78-82MW, in-line with the consensus estimate of 80MW.

SolarCity Corp (NASDAQ:SCTY) has reiterated its full year installation guidance of 475-525MW. It clearly reflects that the company expects a lot of growth in the coming quarters. Increasing installations should boost investor confidence. For the current quarter, Wall Street forecasts 100MW of panel installations. So far, SolarCity has been growing rapidly in the residential solar market without much competition. But the emergence of SunPower Corporation (NASDAQ:SPWR)’s residential business, growth of RGS Energy, and NRG Energy Inc (NYSE:NRG)’s foray into the residential solar market are changing the scenario.

Will SolarCity’s retained value per watt improve?

Analysts argue that soon there will be about a dozen strong solar installers to trigger a fierce competition. SolarCity Corp (NASDAQ:SCTY)’s retained value per watt stood at $1.90 in the fourth quarter of 2013. If that falls, it will be a sign of growing competition. But the stock would go up if the retained value per watt shows improvement. Moreover, investors will be watching closely the leases versus cash sales. SolarCity generates about $2 per watt from leases. But rising cash sales could change the value proposition as customers have begun to realize that cash sales are more advantageous to them in the long-run.

SolarCity Corp (NASDAQ:SCTY) shares jumped 1.89% to $53.45 in pre-market trading Wednesday.

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About the Author

Vikas Shukla
Vikas Shukla has a strong interest in business, finance, and technology. He writes regularly on these topics. - He can be contacted by email at [email protected] and on Twitter @VikShukla10

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