Why Do Analysts Expect SunPower Revenues to Decrease in 1Q16?

What Do Analysts Expect from SunPower's 1Q16 Earnings?

(Continued from Prior Part)

SunPower’s revenue estimates

SunPower (SPWR) reported about $441 million in consolidated revenue for 1Q15. Analysts estimate that the company will report revenue of $324 million in 1Q16, which is close to a 27% decrease on a YoY (year-over-year) basis.

The company’s estimated 1Q16 revenue is about 13% lower than its 4Q15 revenue. The estimated revenue in 1Q16 is lower than the first quarter revenue in the last four years.

Revenue recognition

Revenues of upstream solar (TAN) companies like SunPower (SPWR), First Solar (FSLR), Canadian Solar (CSIQ), SunEdison (SUNE), and Trina Solar (TSL) can fluctuate depending on their revenue recognition model. Also, seasonal changes in weather patterns can impact reported revenue. Revenue recognition, in turn, depends on the status of ongoing projects and the schedule of the future project pipeline.

According to company filings, SunPower expects to derive a substantial portion of its fiscal 2016 revenue through the sale of its projects in the United States. The company expects to complete a substantial portion of these projects by the end of fiscal 2016. As a result, analysts anticipate that the company will report higher revenues in 2H16.

Also, analysts estimate a significant improvement in fiscal 2016 revenue compared to its fiscal 2015 revenue. Analysts’ expectations are in line with the company’s fiscal 2016 guidance.

Fiscal 2016 guidance

SunPower (SPWR) affirmed its fiscal 2016 guidance in its latest company filings except for its EBITDA guidance. The company decreased its fiscal 2016 EBITDA guidance by $65 million to $450 million–$500 million due to the prior recognition of earlier-than-forecasted project completions.

SunPower (SPWR) has a non-GAAP (generally accepted accounting principles) fiscal 2016 revenue guidance of $3.2 billion–$3.4 billion and expects its fiscal 2016 operating expenses to be in the range of $430 million to $455 million. The company maintained its capital expenditure guidance of $210 million–$240 million for fiscal 2016.

In the next part of our series, we’ll take a close look at SunPower’s 1Q16 margin estimates.

Continue to Next Part

Browse this series on Market Realist:

• Part 1 - Can SunPower Outshine Its Peers in 1Q16?

• Part 2 - What Are Analysts Recommending for SunPower Corporation?

• Part 4 - What Do Analysts Expect for SunPower’s Margins in 1Q16?