Peeking out of the cloud of earnings reports this week were several high-profile solar stocks.  On Monday, we saw shining quarterly earnings from Energy Conversion Devices Inc. (NASDAQ: ENER) and ReneSola Ltd. (NYSE: SOL).  Tuesday brought sunny results from JA Solar Holdings Co. Ltd. (NASDAQ: JASO) and LDK Solar Co. Ltd. (NYSE: LDK), but spoiling this week’s solar coming out party was SunPower Corp. (NASDAQ: SPWRA), which reported disappointing profits.  So, what’s with the sun spots in the sector?  Are things looking brighter for solar, or should you stay inside and avoid the sector’s harmful rays?

First let’s look a little closer at the earnings numbers for each solar stock:

• Energy Conversion Devices Earnings – ENER is a maker of flexible solar laminates used on rooftops and buildings reported its best quarter in over a year, and though Energy Conversion Devices did post a loss for the previous three months, that loss was much narrower than analysts had anticipated.  ENER earnings showed a loss of 64 cents per share in its fiscal third fiscal quarter, excluding one-time charges, on revenue of $72 million was much better than the consensus forecasts for $61 million.  The 64 cents per share loss also topped calls for a loss of 75 cents per share. According to the company, its business is “turning the corner,” and it expects to see more improvement throughout the year.  Apparently, solar investors agree, as ENER stock was up substantially following the better-than-expected results.
• ReneSola Earnings – Chinese solar wafer firm ReneSola actually returned to profitability in its Q1 earnings report, citing record product shipments.  The company reported net income of $11.8 million, or 14 cents per share, in the first quarter.  That’s much warmer than the net loss of $30 million, or 22 cents per share, in the same quarter a year ago.  Those profit results also came on very strong revenues of nearly $207 million in the quarter, and nearly twice that of the $107 million in revenue posted a year ago.  Both top- and bottom-line numbers bested analysts’ expectations, and that caused a welcome bump in the shares.
• JA Solar Earnings – Another Chinese solar stock, JA Solar, kept the sector’s winning streak going by reporting net income of $38.4 million in Q1, a big turnaround from a substantial loss in the same quarter a year ago.  This stellar earnings report also was fueled by heated demand for solar cells.  JA Solar said it shipped 272 megawatts of solar cells in the first quarter, an increase of 18% over the fourth quarter, 2009.
• LDK Solar Earnings – Chinese solar cell maker LDK Solar kept up with its peers’ earnings by reporting strong sales and improved margins.  The company said it saw net income of $7.2 million, or 6 cents per share, which easily beat the consensus estimate for earnings of just a penny a share.  Revenue came in at $347.6 million in the quarter, a figure that also beat forecasts.  Adding to the bullish mood for the solar space was LDK’s second-quarter and full-year revenue forecasts that blasted past current consensus estimates.
• SunPower Earnings – Finally, we saw a bit of wobble last quarter from SunPower.  The diversified solar technology firm reported earnings of just 5 cents per share in Q1 on revenue of $347 million. Wall Street was expecting earnings of 8 cents a share on revenue of $346 million.  The company did reaffirm its revenue guidance for the year; however, it said that EPS would range from a loss of 20 cents to a gain of 25 cents. That’s well below the previous guidance for a profit of between 5 cents and 35 cents.  Shares of SPWRA stock got slammed in Wednesday’s trade, as traders headed for shelter.  The stock fell over 7% in the session.

To be certain, the metrics in the solar space are improving.  Revenue is higher on increased demand for solar panels, and the biggest beneficiaries of this trend are the three Chinese solar makers that reported this week.  Over the next couple of weeks we’ll get an even clearer read on solar stocks, as GT Solar International Inc. (NASDAQ: SOLR), Solarfun Power Holdings Co. Ltd. (NASDAQ: SOLF) and Trina Solar Ltd. (NYSE: TSL) all are set to report their respective quarterly results.  If the bulk of this week’s earnings are any indication of what’s ahead in the solar space, alternative energy investors may want to step in and take advantage of the sector’s sunny disposition.

As of this writing, Jim Woods did not own a position in any of the companies named here.

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