Renewable Energy Stocks Q2 Teardown: SolarEdge (NASDAQ:SEDG) Vs The Rest

Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at SolarEdge (NASDAQ:SEDG) and the best and worst performers in the renewable energy industry.

Renewable energy companies are buoyed by the secular trend of green energy that is upending traditional power generation. Those who innovate and evolve with this dynamic market can win share while those who continue to rely on legacy technologies can see diminishing demand, which includes headwinds from increasing regulation against “dirty” energy. Additionally, these companies are at the whim of economic cycles, as interest rates can impact the willingness to invest in renewable energy projects.

The 20 renewable energy stocks we track reported a satisfactory Q2. As a group, revenues missed analysts’ consensus estimates by 5.2% while next quarter’s revenue guidance was 10.9% below.

After much suspense, the Federal Reserve cut its policy rate by 50bps (half a percent) in September 2024. This marks the central bank’s first easing of monetary policy since 2020 and the end of its most pointed inflation-busting campaign since the 1980s. Inflation had begun to run hot in 2021 post-COVID due to a confluence of factors such as supply chain disruptions, labor shortages, and stimulus spending. While CPI (inflation) readings have been supportive lately, employment measures have prompted some concern. Going forward, the markets will debate whether this rate cut (and more potential ones in 2024 and 2025) is perfect timing to support the economy or a bit too late for a macro that has already cooled too much.

In light of this news, renewable energy stocks have held steady with share prices up 4.1% on average since the latest earnings results.

SolarEdge (NASDAQ:SEDG)

Established in 2006, SolarEdge (NASDAQ: SEDG) creates advanced systems to improve the efficiency of solar panels.

SolarEdge reported revenues of $265.4 million, down 73.2% year on year. This print exceeded analysts’ expectations by 1.1%. Despite the top-line beat, it was still a slower quarter for the company with revenue guidance for next quarter missing analysts’ expectations and a miss of analysts’ earnings estimates.

“We are encouraged by our second quarter top line results which saw sequential revenue growth of 30% and an 18% growth in sell through of our solar products by our distributor customers,” said Zvi Lando, Chief Executive Officer of SolarEdge.

Unsurprisingly, the stock is down 22.4% since reporting and currently trades at $18.30.

Read our full report on SolarEdge here, it’s free.

Best Q2: Shoals (NASDAQ:SHLS)

Started in Huntsville, Alabama, Shoals (NASDAQ:SHLS) designs and manufactures products that make solar energy systems work more efficiently.

Shoals reported revenues of $99.25 million, down 16.7% year on year, outperforming analysts’ expectations by 9.6%. The business had an incredible quarter with an impressive beat of analysts’ earnings estimates.

Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 5.8% since reporting. It currently trades at $5.18.

Is now the time to buy Shoals? Access our full analysis of the earnings results here, it’s free.

Slowest Q2: NuScale (NYSE:SMR)

Founded by a team of nuclear scientists, NuScale (NYSE:SMR) specializes in small modular reactor technology, providing scalable nuclear power solutions.

NuScale reported revenues of $967,000, down 83.3% year on year. It was a disappointing quarter, leaving some shareholders looking for more.

NuScale delivered the weakest performance against analyst estimates and slowest revenue growth in the group. Interestingly, the stock is up 59.4% since the results and currently trades at $13.71.

Read our full analysis of NuScale’s results here.

Nextracker (NASDAQ:NXT)

With its technology playing a key role in the Noor Abu Dabhi project, one of the largest solar farms in the world, Nextracker (NASDAQ:NXT) provides solar tracker systems that help solar panels follow the sun.

Nextracker reported revenues of $719.9 million, up 50.1% year on year. This result beat analysts’ expectations by 16.8%. It was a very strong quarter as it also logged an impressive beat of analysts’ operating margin estimates and full-year revenue guidance exceeding analysts’ expectations.

Nextracker delivered the biggest analyst estimates beat and fastest revenue growth among its peers. The stock is down 26.8% since reporting and currently trades at $34.26.

Read our full, actionable report on Nextracker here, it’s free.

EVgo (NASDAQ:EVGO)

Created through a settlement between NRG Energy and the California Public Utilities Commission, EVgo (NASDAQ:EVGO) is a provider of electric vehicle charging solutions, operating fast charging stations across the United States.

EVgo reported revenues of $66.62 million, up 31.8% year on year. This print surpassed analysts’ expectations by 12.2%. It was a stunning quarter as it also logged an impressive beat of analysts’ operating margin estimates and full-year revenue guidance exceeding analysts’ expectations.

The stock is up 99% since reporting and currently trades at $7.66.

Read our full, actionable report on EVgo here, it’s free.

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