As companies in the clean energy space continue to report third-quarter earnings, investors are likely to see a common theme. Alternative forms of renewable energy are becoming more cost effective but still face challenges. Here is a preview of three green companies that will report their quarterly results in the days ahead.
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Overcast Skies
Energy Conversion Devices (Nasdaq: ENER), a maker of solar panel products, is expected to swing to a net loss of 30 cents per share when it reports its fiscal year Q1 results before the market opens. This estimate compares unfavorably to the company's profit of 29 cents per share a year ago. Sales are expected to plunge 41%.
Last quarter, Energy Conversion Devices experienced a similar downturn with negative pressure from a decline in commercial construction and reroofing projects. The company has cut back its production levels to match lagging demand, and it's hopeful that the government's stimulus spending will help reverse these trends in the second half of the company's fiscal year.
Ethanol On Edge
Ethanol producer Green Plains Renewable Energy (Nasdaq: GPRE) will report its Q3 results a day after Energy Conversion Devices. Green Plains is coming off a Q2 in which it reported a slight profit as revenue from ethanol production increased 10.6% from Q1. The company also began ethanol production at two of its plants during Q2 and acquired an additional two facilities that are expected to up its ethanol production capacity by 45%.
It will be interesting to see how Green Plains did in Q3 in light of the results reported earlier this week by Archer Daniels Midland (NYSE: ADM). The business segment, which includes ADM's ethanol business, reported a 59.3% jump in operating profits as corn and manufacturing costs fell. However, the company noted that ethanol prices were lower; in line with lower gasoline prices versus a year ago.
Seeking A Ray Of Light
The solar cell manufacturer JA Solar Holdings (Nasdaq: JASO) could be in for a tough Q3 compared to its prior year results when it reports its earnings November 10 before the market opens. Analysts are expecting an 87.5% drop in EPS on a 56.4% slide in sales. JA Solar has missed estimates in each of its last four fiscal quarters, so another miss here would not be entirely surprising.
The solar industry has not been easy to predict for analysts. A Credit Suisse analyst previously said that Q4 shipments at JA Solar could tumble by as much as 15% on a sequential basis. The same analyst noted that the company, as well as other players in the solar space, has little visibility beyond a few months out.
The Bottom Line
Clean energy companies are battling many of the same macroeconomic headwinds that have been facing other organizations in Corporate America in 2009. This sector continues to innovate and wields solid upside potential. It just might need a shot in the arm along with the rest of economy. (For related reading, check out Spotlight On The Solar Industry.)
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