Ticker:SPWR
Contents
Executive Summary
Company overview
Management
Trusted Partners
Investment Thesis
Climate of Solar Industry
Industry Outlook
Competitor Stock Growth
Conclusion
Executive Summary
Sunpower is a industry leader in solar energy, storage, and batteries, with its high-efficiency solar panels as its core product
They have positioned themselves to be the leader in the upcoming surge in demand of solar systems to average homeowners by spinning off their manufacturing to Malaysia, and focusing on penetrating the new market with strategic offerings and low cost
Company Overview
SunPower is an American energy company that designs and manufactures crystalline silicon photovoltaic cells and solar panels based on an all-back-contact solar cell
World record for efficiency with copper based panels
SunPower Equinox® System
A unique in-house energy storage solution, achieved a storage attachment rate of 50 percent.
Residential Products and Services
Tom Werner
CEO and Chairman of board
Experience: Prior to joining SunPower, he held the position of chief executive officer of Silicon Light Machines, Inc., an optical solutions subsidiary of Cypress Semiconductor Corporation.
Manavendra Sial
Executive Vice President and Chief Financial Officer
Experience: Previously, he served as CFO for VECTRA, a $1 billion technology-driven diversified industry business, which was a portfolio company of certain funds managed by affiliates of Apollo Global Management, LLC.
Norm Taffe
Executive Vice President, Channels
Experience: Prior to joining SunPower, Taffe spent 23 years at Cypress Semiconductor in a wide range of roles. His last seven years there were spent as executive vice president of the Consumer and Computation division, managing more than 350 employees and $400M in revenue.
Eric Potts
Senior Vice President, Commercial Americas
Experience: Prior to SunPower, Eric worked for Cambridge Associates, an investment consulting firm and Industrial Economics, an economic and environmental consulting firm, both located in Boston, Massachusetts.
Management
Trusted Partners
Investment Thesis
Governments are looking to incentivize green energy products in the long-term future
Untapped market. Only 2% of U.S. homes are powered by solar energy
Removing cost, readily access to large capital
SunPower is positioned well to capture a large portion of the residential and commercial solar markets
30% federal solar tax credit through 2021 and over 90% Americans want solar
After splitting, Sunpower is positioned to focus heavily on the US solar market
Large Market Share
Industry Outlook
Business Strategy
Current Price: $49.00 / Share
Investment Recommendation: BUY
The Current Climate of the Solar industry
30% tariff program targeted to imported solar product
Even with the tariff, 98% of solar panels and components are manufactured outside the U.S.
The effect of these tariffs have slowed the flow of lower-cost products to U.S. developers of solar energy and related products
This makes “going green” unattainable and non-incentivized for the average homeowner
Industry Outlook
The solar industry is entering a period of extended growth
With complete removal of the tariffs would result in a 30% drop in solar pricing industry wide, creating an influx of large-scale solar projects between solar companies and residential developers
SunPower has positioned themselves to grab even a greater market share and take advantage on future policies, lower costs of materials, and rising demand
Residential
• With 9% penetration in CA (2% in U.S.) Sunpower’s largest channel is poised for rapid growth
�New Homes
• Solar capacity will triple on new homes by 2025 (300 MW) and Sunpower is already trusted by 18 of the top 20 builders in CA
Commercial
• 70% of buildings have solar potential (145 GW) and Sunpower is #1 in commercial solar for 3 years and counting
Storage
• Only .3% of homes in CA have storage (.1% in U.S.) and power outages continue to rise, creates the need
Revenue Drivers
SunPower Business Strategies
SunPower finalized their split with Maxeon Solar in 2020
2-year agreement with Maxeon to provide the solar panels and related products, which relieves SunPower of the manufacturing duties
Cut cost, non-earning assets and related operating expenses
Create a platform for third party sellers
They are shifting their strategy from manufacturing to focus on sales, leasing, and installation for the market during the predicted surge for demand
Large Market Share
By 2026 the solar industry is projected to reach $223 billion and the US accounts for 44.2% of that market. As of today, it is an $8 billion industry
SunPower is the most popular commercial solar panel provider in the US as well as the second largest residential solar provider installer
SunPower is positioned well to benefit from the future increase of solar power due to its already high market share and specialized focus on the US market
Comparative Stock Growth over the Year
Q & A
Appendix
DuPont Framework
ROE- 1.03
Profitability- .012
Efficiency- .85
Leverage- 101.02
Financial Ratios
Current Ratio: 1.53
PE Ratio: 201.3