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SolarCity (SCTY) Stock Hurt by Wider-than-Expected Q1 Loss

SolarCity Corp. SCTY, the largest U.S. rooftop solar installer, posted an adjusted loss of $2.56 per share, much wider both the Zacks Consensus Estimate of a loss of $2.30 and the year-ago loss of $1.52 per share. The wider loss can be attributed to the company’s rising expenses.

Shares of the company tanked 20.4% during afterhours trading on the news.

Total Revenue & Gross Profit

In marked contrast to the appalling loss, SolarCity posted total revenue of $122.6 million in the quarter, beating the Zacks Consensus Estimate of $105 million by 16.8%. On a year-over-year basis too, reported revenues surged 81.6% on the back of increased operating leases and solar energy systems incentives as well as higher solar energy systems and components sales.

SolarCity’s gross profit in the first quarter, however, plunged 38.3% to $13.4 million from $21.8 million a year ago.

Operating Highlights

In the reported quarter, total deployment was 245 megawatt (MW), up 71.3% year over year, bringing the total installed capacity to 2,092 MW as of Mar 31, 2016.

The company installed 214 MW of solar panels in the quarter, up 39.9%. It exited the quarter with cumulative installations of 2,159 MW.

During the quarter, commercial installations surged 114.3%, while residential installations grew 32.4%.

The company’s total operating expenses shot up 53.9% to $226.9 million primarily due to higher sales and marketing, research and development, and general and administrative expenses.

Cost per watt was $3.18 in the first quarter, up 10%. However, SolarCity’s installation cost declined 5.7% to $1.98 per watt.

Financial Position

As of Mar 31, 2016, SolarCity had cash and cash equivalents of $361.7 million, compared with $382.5 million as of Dec 31, 2015.

Long-term debt as of Mar 31, 2016 increased to $1,101.9 million (net of current portion) from $1,006.6 million as of Dec 31, 2015.

In the first quarter, SolarCity’s used net cash of $193.1 million in operating activities, compared with $171.3 million a year ago.

Guidance

For the second quarter of 2016, SolarCity expects operating expenses of $240 million to $250 million and non-GAAP loss per share in the $2.70–$2.80 band (wider than the first-quarter loss of $2.56 and the second-quarter 2015 loss of $1.61).

The company expects installations to decline 2% year over year to 185 MW. The decline will mainly be due to the completion of a 14 MW project in the first quarter, much earlier than expected.

SolarCity expects to install 1.0−1.1 gigawatts (“GW”) for 2016, slightly lower than its previous guidance of 1.25 GW.

Peer Releases

SunPower Corp. SPWR reported first-quarter 2016 adjusted loss of 42 cents per share, wider than the Zacks Consensus Estimate of loss of 23 cents by 82.6%. In the year-ago quarter, the company had reported earnings of 5 cents per share.

First Solar Inc. FSLR reported first-quarter 2016 earnings of $1.66 a share, sweeping past the Zacks Consensus Estimate of 91 cents by 82.4%. The reported number was also a reversal from the prior-year loss of 61 cents, reflecting higher sales, gross profits, operating income and lower expenses.

8point3 Energy Partners LP CAFD reported earnings of 27 cents per share in the first quarter of fiscal 2016 (ending Feb 29, 2016), while the Zacks Consensus Estimate was a loss of 13 cents.

Zacks Rank

SolarCity currently carries a Zacks Rank #3 (Hold).

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FIRST SOLAR INC (FSLR): Free Stock Analysis Report
 
SOLARCITY CORP (SCTY): Free Stock Analysis Report
 
SUNPOWER CORP-A (SPWR): Free Stock Analysis Report
 
8POINT3 ENERGY (CAFD): Free Stock Analysis Report
 
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