I have written before about embracing new fuel sources, focusing first on fixed power generation mostly to generate electricity. Today I am highlighting a company that is doing something about it, and making money in the process.
California based SunPower Corporation (NASDAQ:SPWR), designs, develops, manufactures and sells solar electric power products. Founded in 1985, the company is a leading provider of high technology commercially manufactured solar cells, solar panels, and inverters that generate electricity from sunlight. Carved out of Cypress Semiconductor Corporation (NASDAQ:CY) in November 2005, the firm currently offers their products globally.
Solar panel products and inverters produced by SPWR are used in commercial and residential power applications, government agencies including NASA, and for various other applications. Besides the well-known environmental benefits of solar energy, SPWR is driving down solar panel costs to approach being competitive on a long-term basis with other forms of power generation as traditional electricity costs soar. SPWR has also improved solar cells by placing the metal contacts needed for conducting electricity on the back of the cells. In addition to providing up to 50% more power per square foot than conventional solar cells, this offers a unique aesthetic appealing to owners that place the panels on the roofs of their homes and businesses.
With these technologies, SPWR stands poised to take advantage of growing environmental and economical appeal for consumers. The company began producing commercial products in 2004 and is rapidly expanding its scope in the solar power industry. Last month it announced that it has agreed to acquire PowerLight Corporation, a provider of large scaled solar power systems and a large customer. The acquisition will allow SPWR to incorporate their advanced solar cell technology on a multi-hundred-kilowatt scale. PowerLight has a greater focus on larger scale commercial markets.
With the increasing scope and innovation of their products, it appears the firm is in a promising position in the market for an alternative energy source, and its growth fundamentals reflect this. Over the past year, revenue for SPWR grew a remarkable 253.45%, with a year-over-year quarterly revenue growth an impressive 198.40%, the highest in the scientific and technical instruments industry. The firm has concentrated on growth and has only recently become profitable, with trailing 12 month gross margins of 19.64%.
In light of its unique growth and young age, SPWR has a unique valuation with a price to earnings [P/E] ratio of 199.58. The price to earnings to growth [PEG] ratio of 2.21 compared to an industry average of 1.36 similarly portrays a new and rapidly growing company and great expectations of future earnings.
Part of the valuation is based on SPWR purchasing PowerLight to gain a bigger foot print in the commercial/business world. Microsoft recently selected SPWR for its solar panels for one of the largest commercial solar systems in Silicon Valley at Microsoft's Mountain View campus.
As a spin-off company now in control of its own destiny, we expect a clear business plan executed with the precision of a single focus entity.
SPWR 1-yr chart