After securing a deal with Southern California Edison (SCE, Financial), SunEdison (SUNE, Financial) shares rose 4.48% to touch $30.77 on Friday. SCE is responsible for providing 14 million customers in California with electricity and the deal will see SunEdison install 33 MW of rooftop solar power.
During the day, 2,724,131 shares traded hands. With a market cap of $8.28 billion, SunEdison’s stock has a 50 day moving average of $26, a 52-week low of $13.09 and a 52-week high of $30.57. The company’s net income growth of 39.4% compared to the same quarter a year ago, rose from -$614 million to -$372 million.
Management views
SunEdison’s Managing Director, Sam Youneszadeh, said “We are very pleased to be working with Southern California Edison to modernize and upgrade the utility grid. As this project demonstrates, solar systems can be sized and strategically located to provide maximum benefit to both the utility grid and California homeowners and businesses.”
Post announcing its quarterly earnings on May 7, SunEdison reported an EPS of $-0.65 against the estimate of $-0.37. The company declared revenues of $32 million or the quarter compared to the estimate of $491.77 million. This same quarter last year saw the company posting an EPS of $2.31. SunEdison’s revenue fell 20.4% compared to the same quarter last year.
Company reckoner
SunEdison Inc was founded in 1984 and was formerly known as MEMC Electronic Materials Inc. Based out of Maryland Heights, Missouri SunEdison Inc creates, sells and manufactures silicon parts to the semiconductor industry. Operating in Solar Energy, Semiconductor Materials and TerraForma Power segments, SunEdison’s Solar Energy division is responsible for providing solar energy integration for the designing, installing, financing, monitoring, operating and maintenance portions of the solar market. SunEdison also manufactures solar modules, silicon parts and polysilicon. The company has been an integral part of connecting approximately 974 solar power systems that have generated 2.35 GW of solar energy. The TerraForma Power division is responsible for the operation of clean power generation assets that provide electricity to commercial, utility and residential customers. SunEdison’s Semiconductor Materials division markets silicon parts to be sold to the semiconductor industry. These include prime and test/monitor parts, polished parts for memory and RF devices and power devices. SunEdison serves manufacturers of memory, semiconductor devices, microprocessor and ASIC manufacturers. A direct sales force markets its products.
Our take
SunEdison is being given a HOLD rating by analysts. This rating is based on a range of factors that illustrate both strength and weaknesses with very little to show to justify the expectation of either a positive or negative performance of this stock. The company’s strengths include solid stock price performance, compelling growth in net income and fast increasing profit margins. As a counter, the company’s weaknesses are evident in a generally higher debt management risk as well as weak operating cash flow.
The gross profit margin for 2015’s first quarter increased compared y-o-y. Even with decreased sales, the net income has risen. SunEdison has extremely weak liquidity with a current quick ratio of 0.37 that illustrates a clear lack of ability to cover short term cash needs. The liquidity has dropped since this same period a year ago, despite already having weak liquidity to start off with. This indicates deteriorating cash flow. Stockholders’ equity has risen by 133.13% in the same quarter from last year. The key liquidity measurements show the company is open to being hit by financial difficulties in the near future.
