We expect SunEdison Inc. SUNE to beat expectations when it reports second-quarter 2015 results on Aug 6.
Why a Likely Positive Surprise?
Our proven model shows that SunEdison is likely to beat earnings because it has the right combination of two key ingredients.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate (loss of 39 cents) and the Zacks Consensus Estimate (loss of 45 cents), stands at +13.33%. This is very meaningful and a leading indicator of a likely positive earnings surprise for the shares.
Zacks Rank: SunEdison has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) and 3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
The combination of SunEdison’s Zacks Rank #3 and +13.33% ESP makes us confident of an earnings beat.
What is Driving the Better-than-Expected Earnings?
Although SunEdison reported dismal results in the first quarter, its higher energy sales remain a positive.
We believe that the world’s leading renewable energy developing company will benefit from the rise in the demand for solar energy and divestment of the semiconductor business will enable it to focus better on its core competencies.
SunEdison has been expanding its clean energy capabilities through various alliances and acquisitions, which should boost results in the second quarter and beyond. The demand for clean energy will increase manifold over the long term, and SunEdison is well positioned to capitalize on this opportunity.
Furthermore, SunEdison has been aggressively investing in emerging markets, particularly in India. Notably, on Jun 7, the Wall Street Journal reported that the company is set to expand its Indian base by investing approximately $15 billion through 2022. The company plans to develop 15 GW solar and wind projects in the country. SunEdison looks to capitalize on the opportunity in the growing Indian solar market, and boost its top line.
Other Stocks to Consider
Here are some other stocks that you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Amtech Systems Inc. ASYS, with an Earnings ESP of +8.00% and a Zacks Rank #3.
2U Inc. TWOU, with an Earnings ESP of +3.57% and a Zacks Rank #3.
Vivint Solar, Inc. VSLR, with an Earnings ESP of +1.52% and a Zacks Rank #3.
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