SunPower Corporation (SPWRA) was selected by a number of U.S. government agencies to install solar projects. The government agencies include the Department of Energy's National Renewable Energy Lab (NREL), the General Services Administration (GSA), the Navy and the Air Force. SunPower expects to create more than 1000 local jobs while executing these projects. These contracts represent a minimum of 20 megawatts (MW) of new solar projects for SunPower.
SunPower is focused on nurturing and enlarging its U.S. market, which generated 34% of its revenues in the second quarter of 2010. The company has been proactive in tapping the government sector in the U.S. since 1999 resulting in the installation of more than 20 MW of solar power systems at U.S. government facilities.
Looking ahead, SunPower seeks to establish itself as the leader in high performance solar power products. SunPower’s solar cells with higher conversion efficiency will lead to improved silicon utilization. Improved cell efficiency reduces the cost of energy by increasing energy production from each manufactured wafer into a SunPower solar cell.
For the same reason, increased efficiency reduces the cost per watt and cost per kilowatt-hour for feedstock and materials, depreciation and other manufacturing expenses, installation time, land and system operations and related maintenance.
SunPower continues to invest in research and development to improve solar cell efficiency, lower manufacturing costs, reduce wafer thickness, improve throughput, processing yield and quality and introduce new products that enhance the efficiency and cost-effectiveness of solar power for end-customers. SunPower has increased cell efficiency by a full four percentage points over the last five years while driving down manufacturing costs.
Headquartered in San Jose, California, SunPower designs, develops, manufactures, markets and sells high-performance solar electric power technology products, systems and services worldwide for residential, commercial and utility-scale power plant customers.
SunPower’s semiconductor-based solar cells and solar panels, which convert sunlight into electricity, are manufactured using proprietary processes and technologies.
The fundamentals of SunPower appear strong, given the revival of the alternative energy industry and specifically solar power energy, higher captive generation of panels, rising average conversion efficiency, declining silicon cost and assured silicon supply.
In fiscal 2010, SunPower expects revenues in the range of $2 billion – $2.2 billion with an adjusted EPS of $1.35 – $1.65. We are, however, apprehensive of the near-term performance of the company due to the modules glut in the market, subsidy risk in Germany and Italy, foreign currency risk and the volatile economic environment in Europe.
SunPower is also trading at a premium compared to its Zacks #1 Rank (Strong Buy) peers such as JinkoSolar Holding Co. Ltd. (JKS), LDK Solar Co. Ltd. (LDK) and China Sunergy Co. Ltd. (CSUN) – based on forward earnings estimates. The above peers, we believe, are more promising in the near term compared to the Zacks #3 Rank (hold) SunPower stock.
CHINA SUNERGY (CSUN): Free Stock Analysis Report
LDK SOLAR CO (LDK): Free Stock Analysis Report
SUNPOWER CORP-A (SPWRA): Free Stock Analysis Report
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