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SolarEdge (SEDG) to Report Q3 Earnings: What's in Store?

SolarEdge's (SEDG) Q3 results are likely to reflect increased installation rates in both commercial and residential products,andan expanded manufacturing rate and modest price increase.

This story originally appeared on Zacks

SolarEdge Technologies, Inc. SEDG is slated to report third-quarter 2021 results on Nov 2, after the closing bell.

- Zacks

In the last reported quarter, the company delivered an earnings surprise of 14.29%. Its earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 17.88%.

Factors to Note

During the last few quarters, the company has been witnessing a ramp up in demand for solar products across all business scope and geographies. Also, consistent increase in sell-through and installation rates in both residential and commercial products has been boosting revenues. This trend is likely to have continued in the third quarter as well. This, in turn, might get reflected in SolarEdge’s third-quarter topline.

During the second quarter, the company successfully initiated shipments of SolarEdge energy bank residential battery and inverters to the United States and Europe. Sales of these products are likely to have positively impacted the company’s revenues in the to-be-reported quarter.

However, in the beginning of the third quarter, the company’s Vietnam manufacturing facility was working at reduced capacity due to coronavirus-led lockdowns. This may have an adverse impact on its quarterly performance. However, the expanded manufacturing rate in China might have offset the impact.

The Zacks Consensus Estimate for third-quarter revenues is pegged at $529.7 million, suggesting growth of 56.7% from the year-ago quarter.

The company has been facing component shortages,which tend to result in higher cost for components, due to the impact of the COVID-19 pandemic. It has also been experiencing higher logistic costs and freight expenses. Such cost increases are expected to have weighed on SolarEdge’s performance in the to-be reported quarter.

However, the modest price increases implemented by the company may have contributed to the third-quarter performance.

Also, the expansion initiatives taken by the company in its manufacturing facilities are likely to get reflected in the to-be-reported quarter’s results.

The Zacks Consensus Estimate for third-quarter earnings is pegged at $1.38 per share, indicating an improvement of 14.1% from the prior-year reported figure.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for SolarEdge this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that is not the case here.

Earnings ESP:The company’s Earnings ESP is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: SolarEdge currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Here are three solar players you may want to consider, as these have the right combination of elements to post an earnings beat this season:

FTC Solar, Inc FTCI has an Earnings ESP of +6.57% and a Zacks Rank #3.

Array TechnologiesARRY has an Earnings ESP of +146.67% and a Zacks Rank #3.

Sunrun RUN has an Earnings ESP of +504.92% and a Zacks Rank #2.

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