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It is not surprising to see that SolarCity (NASDAQ:SCTY) shares have soared close to 21% since my last article on the company on Feb. 11. Although the company didn't disclose its complete earnings when it reported results last week, there were numerous positive takeaways for investors. As a result, despite a 370% rise over the last one year, and not reporting its full results because of incomplete accounting due to recent acquisitions and higher deployments, SolarCity continues to remain a buy. Let's see why.

A few details of the quarter

SolarCity's estimated nominal contracted payments remaining increased to $1.99 billion as on Dec. 31, 2013, up 79% year-over-year and 15% since the end of the third quarter of 2013. In the fourth quarter, operating lease revenue was $22.4 million, up 59% from $14 million last year, as a result of a higher base of operating lease megawatt deployed. SolarCity's Q4 revenue of $47.3 million exceeded the consensus estimate of $43.4 million.

SolarCity exceeded its expectations that it had set for itself. First, it installed 278 megawatts instead of its earlier goal of 250 megawatts. Next, the company reduced the fully loaded cost of installation to 30% through operational efficiency, economies of scale, process improvements, and the acquisition of Zep. Finally, SolarCity not only reduced its cost of capital through securitization, but also increased capital resources.

Deployment volume for the fourth quarter came in at 103MW, with 70MW from residential deployment, which was up 130% year-over-year, and 33MW of commercial deployment, which was 116% higher from the prior-year quarter. Moreover, SolarCity has increased its contract value by $900 million, from $1.1 billion in 2012 to over 80,000 energy contracts worth $2 billion in one year.

Lighting the way ahead

SolarCity has been gaining market share over its rivals. The company's market share in the residential U.S. market has gone up to 32%, from 19% in 2013. This impressive gain in market share gives it higher economies of scale to continue to invest in technology and services that should separate it further from competitors and provide value proposition to customers.

More impressively, SolarCity expects to double installations to 475MW-525MW in 2014. In addition, SolarCity has another advantage over its peers. Since the company doesn't produce its own solar panels, it doesn't have to deal with pricing and margin issues. The reduction in silicon prices has pressurized many U.S.-based solar companies; however, due to the third-party ownership business model, SolarCity has been able to overcome these issues. The company designs, installs, and sells or leases solar panels, and has been acquiring firms to diminish both customer acquisition costs and PV installations.

Also, the reducing price of solar panels is driving SolarCity forward. The company has surpassed its 2012 cost reduction estimate, as the price of solar panels dropped nearly 30% in 2013.

Efforts are being made to decrease soft costs, which currently account for around 52% to 64% of total installation costs. The reduction in soft costs will drive down the installation price further and help SolarCity strengthen its market share going forward.

Also, improved hardware technology and process improvements should reduce actual variable costs. SolarCity opened 10 new operation centers in the fourth quarter, taking the total count to 46, which is 50% higher than last year. Account management centralization has helped cost reduction, improved customer satisfaction, and ability to extend service hours.

Capitalizing on the solar story

SolarCity's costs have dramatically declined, cycle times have reduced, and the company's culture and sense of pride in the importance of the mission it has undertaken has evolved. Further cost reductions resulting from hardware, in both commercial and residential, are expected.

Additionally, SolarCity is also focusing on storage and grid integration, which are essential to the continued adoption of solar over the long term. SolarCity promises battery cost reductions as a result of economies of scale and manufacturing, storage cost reduction, and providing solar generation that's available at night.

On the commercial side, SolarCity recently launched DemandLogic, which combines intelligent software with solar output and batteries in order to reduce demand charges and energy bills of a customer. The financial strategy is designed to increase the sources of capital and drive down cost of capital in this asset-intensive distributed generation business.

Conclusion

Also, SolarCity has been changing the way that clean energy is delivered to homeowners, offering financial products that will allow customers access to debt instruments, backed by diverse portfolios of solar assets. So, the company is doing a lot to promote solar as a real alternative to traditional sources of energy, and it has been seeing solid growth in its vital metrics. So, investors should hold on to this solar growth story for the long run, as it is set to soar higher.

Source: Is SolarCity Poised For Yet Another Breakout?