Solar stocks haven’t been the most consistent patch of the Q1 earnings field. We’ve seen a combination of both stellar growth as well as cautious optimism from a variety of firms.

For residential solar installer and billionaire Elon Musk’s baby SolarCity (SCTY), the tale is the same.

However, given the go-go returns of SCTY stock — up 17% as of midday Thursday — seem to be focusing strictly on the good aspects of the SolarCity earnings report.

Thing is, the “good” was pretty good for a solar stock … except, SCTY isn’t really a traditional solar stock. SolarCity is something entirely different, and it must be evaluated as such. As promising as today’s report is, you have to ask yourself why you’re even looking at SCTY stock and know that it might not be your best bet to get solar stock exposure.

But it might be a good holding anyway.

SolarCity Earnings

SolarCity revenues for Q1 came to $63.5 million, a 112% year-over-year improvement and a Street beat of about 19%. Better yet, that’s the fifth straight quarter in which SCTY revs have topped analyst estimates.

The key driver has been SolarCity’s ability to continue installing new residential solar arrays quickly. For the latest reported quarter, SCTY managed to install 82 megawatts (MW) worth of solar panels on people’s and businesses rooftops.

That amount was on the high side of the company’s previous guidance, and it caused SCTY to bump up its full-year installation guidance by 25 MW. Through 2014, SolarCity now predicts that it will be able to install between 500 and 550 MW worth of solar panels this year and a whopping 900 MW to 1 gigawatt (GW) worth of panels in 2015.

That’s great — more people are choosing SolarCity and rooftop solar in general. But…

SCTY Isn’t Completely Cloud-Free

There are a few glaring problems and issues that investors are missing. One is a lack of profits.

While revenue surged, SolarCity managed to report a GAAP net loss of 26 cents per share, but adjusted losses of 82 cents per share. Analysts predicted a loss of 72 cents per share.

What’s more is that SCTY estimates that that loss will grow higher in the next quarter. The residential solar installer expects to report a net loss of 90 cents to $1 per share in Q2, or worse than the analyst consensus — by a lot.

Look, many young companies lose money. But when you ramp up revenues like crazy and the losses still mount, eventually, you’re looking at a long-term world of hurt. The dot-com boom was driven by “all revenue, no profits” tech companies … and we all know how that turned out.

And looking deeper into sales, we can find some holes there, too. Commercial installations — which is more desirable from a stability and profitability point — stalled, rising about 1 MW year-over-year. Also, based on rising systems sales data, it seems that residential customers are choosing to purchase outright SCTY rooftop solar arrays rather than lease them.

With prices of solar panels still in the toilet and the number of installers rising, margins at SCTY have been compressed. SolarCity makes up for some that margin loss on the leases, but that extra profit potential is chipped away when someone hands it a check outright.

Bottom Line

The problem lies in just how investors think about SCTY stock. Although SolarCity is technically classified as a semiconductor firm — like many of its solar brethren — that’s far from reality. SCTY essentially is a general contractor, no different than your local HVAC installer or plumber.

SolarCity does sell a perhaps sexier product than toilets, but investors still might be getting ahead of themselves when evaluating SCTY stock.

And with new competition rising in rooftop solar market — First Solar (FSLR), SunPower (SPWR) and utility NRG (NRG) all have announced new deals to get into the space — things are going get a bit more commoditized in the installation arena.

Given the mounting losses, the complexity of its accounting and rise of new competition in the rooftop market, SCTY stock is very much in the “trade, but don’t invest” category. And that could still prove fruitful in the short to medium term.

Just keep in mind that by buying SCTY, you’re really not buying a traditional solar firm, and it should be evaluated on its own merits, and little else.

As of this writing, Aaron Levitt did not hold a position in any of the aforementioned securities.