The solar industry had another busy week with a number of announcements and earnings reports from some of the largest companies in the business. It was so eventful, in fact, that I can’t cover everything in this week’s roundup, but I can hit the items investors most need be aware of.
As the solar industry evolves into a more mature market and players define where they think they’ll have a competitive advantage, it’s time for investors to start looking at where companies fit into the market and whether they’ll have a profitable future. With that context in mind, here are the notable news items from the solar industry this week.
X-Series solar panels on a residential rooftop. Image source: SunPower.
SunPower signs a P-Series supply deal
SunPower (NASDAQ:SPWR) has been laying out its plans for the future, and a central piece of its strategy is based on combining the P-Series solar panel (which uses commodity cells to create a slightly higher efficiency “commodity-plus” panel) with the Oasis power plant design. The company is essentially transitioning from the utility-scale project-building business to supplying pre-engineered solutions to developers, like utilities. The strategy makes sense, but we had yet to see much indication that it was taking hold in the market… until this week.
stock market tips: WashingtonFirst Bankshares Inc(WFBI)
- [By WWW.GURUFOCUS.COM]
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stock market tips: FMC Technologies, Inc.(FTI)
- [By Matthew DiLallo]
Following a series of M&A announcements in the oilfield-services sector since the onset of the oil market downturn, French oil-field service company Technip and U.S. oilfield equipment company FMC Technologies (NYSE:FTI) hooked up in an all-stock deal valuing the combined company at $13 billion. Shareholders of each company will own 50% of the combined entity, to be named TechnipFMC, which implies a roughly $6.5 billion acquisition valuation for each entity. The transaction, which should close early next year, will “combine Technip’s innovative systems and solutions, state-of-the-art assets, engineering strengths, and project management capabilities with FMC Technologies’ leading technology, manufacturing, and service capabilities.” Further, it should save $400 million in annual costs by 2019. Moreover, it will enable the combined company to compete better against larger oil-field service rivals Baker Hughes (NYSE:BHI), Halliburton (NYSE:HAL), and Schlumberger (NYSE:SL B), which have all gained strength during the downturn either through M&A activities or cost savings initiatives.
stock market tips: Gas Natural Inc.(EGAS)
- [By Monica Gerson]
Gas Natural Inc (NYSE: EGAS) is projected to post its quarterly earnings at $0.23 per share.
Caleres Inc (NYSE: CAL) is expected to post its quarterly earnings at $0.23 per share on revenue of $632.89 million.
stock market tips: URS Corporation(URS)
- [By Ben Levisohn]
Fidelty’s John Mirshekaritook a look at URS(URS) today at the Value Investing Congress.His takeaway: The stock could double in two years.
Agence France-Presse/Getty Images
His analysis started with URS’s use of its free cash. During the past, it hasn’t been pretty. They spent 6.3 billion on eight acquisitions, they’ve bought companies at valuations higher than own stock and return-on-equity has dropped from high teens to just 6%.
The problem hasn’t been its business: Its return on tangible capital is 17%. Instead, the problem is that its management hasn’t maximized value through capital allocation. URS has lowest valuation: 9x 2013 cash earnings in its industry.
Part of the problem: Management incentives are based on net income. This year, however, relative total shareholder return was added., something Mirshekari calls”a step in the right direction.” In May, URS filed an amended proxy which says it will look to change incentives from net income to return on equity and earnings per share. More importantly, it said acquisitions would end.
If all goes right, URS could double in two years,Mirshekari says, comparing it to AECOM Technology (ACM).
Looks a lot like AECOMM, which did something similar and rallied.
- [By Ian Wyatt, Publisher & Chief Investment Strategist, Wyatt Investment Research]
Fund manager John Mirshekari, of the Fidelity Low-Priced Stock Fund, recommended shares of URS (URS), an engineering and construction contractor.