After an impressive comeback in the initial months of 2015, solar ETFs again faltered as oil prices resumed their plunge. In addition, the meltdown in the Chinese stock market in recent months also added to brutal trading in these ETFs as China is one of the dominant countries in their portfolio (read: 4 ETFs Unexpectedly Rocked by China Turmoil).

In such a sluggish backdrop, will Q2 earnings by the solar makers be able to bring some luster in this corner of the ETF world? A few industry primes including First Solar (FSLR), SunPower (SPWR) and SolarCity (SCTY) have released their Q1 results and the stock performances have been good so far.

Among the trio, First Solar has spread an air of optimism into the entire space while SunPower dampened investors’ mood slightly. Meanwhile, SolarCity post mixed results. Let’s dig into their earnings in detail below:

First Solar Earnings in Focus

The largest U.S. solar manufacturer reported blockbuster Q2 results that surpassed our estimates on both the top and the bottom lines. Earnings per share of 52 cents strongly beat the Zacks Consensus Estimate of 7 cents and were well ahead of the year-ago earnings of 4 cents. Revenues climbed 65% year over year to $896.2 million and edged past our estimate of $769 million.

For the full year, the company expects earnings per share of $3.30-$3.60, including a non-recurring benefit of 16 cents related to ownership interest in 8point3, and revenues in the range of $3.5–$3.6 billion. The Zacks Consensus Estimate for both earnings and revenues are currently pegged at $1.60 and $3.46 billion, respectively.

Shares of this thin-film solar PV maker jumped as much as 12% in after-market hours following the solid earnings announcement on August 4 after the closing bell (read: 2 Ways to Play Solar Boom with ETFs).

SolarCity Earnings in Focus

Though the adjusted loss per share sharply widened to $1.61 from 96 cents in the year-ago quarter, it was on par with the Zacks Consensus Estimate. Revenues climbed 13% year over year to $102.8 million, well above our estimate of $91 million. The company made a record 189 megawatts (MW) of solar panels installments during the quarter, up 77% year over year.

It expects installations of new solar panels to reach fresh records of 260 MW in the third quarter, which represents year-over-year growth of 89%. For the full year, the company reaffirmed its guidance for 920–1000 MW installations. Further, the largest U.S. residential solar installer projects adjusted loss per share of $2.05 to $2.15 for the ongoing quarter, much wider than the current Zacks Consensus Estimate of a loss of $1.97.

SolarCity added 1.6% to date post its earnings announcement on July 29 after the closing bell.

SunPower Earnings in Focus

Earnings per share came in at 9 cents, missing the Zacks Consensus Estimate by a nickel and decreasing 55% from the year-ago earnings. Revenues dropped 39.3% year over year to $376.7 million and lagged our estimate of $572 million.

The second-largest U.S. solar manufacturer expects revenues in the range of $400–$450 million for the third quarter and $2.4–$2.6 billion for the full year. The current Zacks Consensus Estimate at the time of writing is pegged at $430 million and $2.4 billion for the third quarter and full year, respectively. Further, earnings per share are expected in the range of $1.50–$1.80; the midpoint of which is higher than our current estimate of $1.29.

The stock gained nearly 4.1% over the past five trading days since its earnings announcement on July 28.

ETFs in Focus

Given mixed earnings and decent share price movements by these major players, solar ETFs are on investors’ radar for the coming days. There are currently two funds available in the space that are detailed below (see: all the Alternative Energy ETFs here):

Guggenheim Solar ETF (TAN)

This ETF follows the MAC Global Solar Energy Index, holding 29 stocks in the basket. SolarCity, First Solar, and SunPower take the first, third and sixth positions in the basket with a combined 19.7% share. The Chinese firms dominate the fund’s portfolio with nearly 46.7%, followed by U.S. (37.4%).

The product has amassed $282.7 million in its asset base and trades in solid volume of around 269,000 shares a day. It charges investors 70 bps in fees per year. The fund shed about 4% over the past five trading days and has a Zacks ETF Rank of 3 or ‘Hold’ rating with a High risk outlook.

Market Vectors Solar Energy ETF (KWT)

This fund manages a $19.8 million in its asset base and provides global exposure to 33 solar stocks by tracking the Market Vectors Global Solar Energy Index. Here, SCTY and FSLR take the second and third spots, respectively, with a combined 13.9% share each while SPWR makes up for the eighth place in the portfolio at 4.4%.

In terms of country exposure, U.S. and China account for the top two countries with 36% and 33.8% allocation, respectively, closely followed by Taiwan (15.1%). The product has an expense ratio of 0.65% and sees paltry volume of about 2,000 shares a day. The ETF lost 3.1% in the past five days (read: Cloud Over Solar ETFs?).

Bottom Line

The current beaten down prices of the solar ETFs could be viewed as nice opportunities to tap the “clean energy” drive with renewable energy sources. This is especially true as the global commitment to the planet seems much more real now thanks to the surging demand for solar power, huge levels of panel installations, global warming issues, new and advanced technologies, efficient alternative energy application, and Obama’s ‘Climate Change Action Plan’.

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FIRST SOLAR INC (FSLR): Free Stock Analysis Report
 
SOLARCITY CORP (SCTY): Free Stock Analysis Report
 
SUNPOWER CORP-A (SPWR): Free Stock Analysis Report
 
GUGG-SOLAR (TAN): ETF Research Reports
 
MKT VEC SOLAR (KWT): ETF Research Reports
 
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