Long-established in the Semiconductors industry, SunPower Corp (SPWR, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 11.87%, juxtaposed with a three-month change of -37.97%. However, fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of SunPower Corp.
Decoding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 5/10
- Profitability rank: 4/10
- Growth rank: 3/10
- GF Value rank: 2/10
- Momentum rank: 2/10
Based on the above method, GuruFocus assigned SunPower Corp the GF Score of 55 out of 100, which signals poor future outperformance potential.
Understanding SunPower Corp's Business
SunPower Corp, with a market cap of $1.02 billion, is a leading solar technology and energy services provider. It offers fully integrated solar, storage, and home energy solutions to customers primarily in the United States and Canada through an array of hardware, software, and financing options and smart energy solutions. The company's sales channels include a network of both installing and noninstalling dealers and resellers that operate in residential and commercial markets as well as a group of in-house sales teams in each segment engaged in direct sales to end customers. Despite its impressive sales of $1.88 billion, the company has a concerning operating margin of -1.64%.
Financial Strength Breakdown
SunPower Corp's financial strength indicators present some concerning insights about the company's balance sheet health. The company's interest coverage ratio of 0 positions it worse than 0% of 647 companies in the Semiconductors industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. The company's Altman Z-Scoreis just 0.28, which is below the distress zone of 1.81. This suggests that the company may face financial distress over the next few years. Additionally, the company's low cash-to-debt ratio at 0.28 indicates a struggle in handling existing debt levels.
Profitability Breakdown
SunPower Corp's low Profitability rank can also raise warning signals. This rank is a measure of the company's profitability in comparison to other companies. A low rank indicates that the company may be less profitable than its competitors.
Growth Prospects
A lack of significant growth is another area where SunPower Corp seems to falter, as evidenced by the company's low Growth rank. Lastly, SunPower Corp predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Conclusion
Given SunPower Corp's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. While the company has a strong reputation in the Semiconductors industry, its current financial indicators suggest that it may struggle to maintain its historical performance. Investors should consider these factors when making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
