Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
The leading supplier for the U.S. residential (rooftop) solar market is SunPower (SPWR). We haven’t previously taken any notice of this company in our writings about the industry, and that should be redressed. SunPower really is an interesting company. Below you can see its relative performance versus some of its peers:
Unlike most other solar companies, SunPower hasn’t raked up large losses. One of the reasons they’re doing better than the average solar company is that they have a strong presence in markets that are growing very well, like the U.S., Japan, and Italy. Their strong domestic position (69% of revenues come from North America) in the U.S. is particularly helpful, as margins in the U.S. are a lot higher than in Europe.
Europe is usually the most important market for almost all other solar companies, due to the fact that Europe still is the largest solar market by far. Net margins (non-GAAP) stood at 19.1% for North America in the last quarter. Compare that to the margins in its two biggest markets in Europe, Germany and Italy (a combined 3.1% gross margin) and it becomes instantly clear. [Read on here]