VALUATION HIGHLIGHTS

1. Residential Solar constitutes 100% of the Trefis price estimate for SunPower's stock.

WHAT HAS CHANGED?

Q2'23 Earnings update

SunPower posted a weaker-than-expected set of Q2 2023 results. While revenue grew by 11% year-over-year to $463.85 million, driven by a higher shipment of residential solar products, adjusted net losses stood at $0.13 per share, missing estimates due to lower gross margins.

Below are key drivers of SunPower's value that present opportunities for upside or downside to the current Trefis price estimate for SunPower:

SunPower Technologies

• Solar Power System Revenue: SunPower's Solar power systems revenue rose from around $540 million in 2020 to about $787 million in 2021. The metric rose further to about $1,340 million in 2022. Trefis expects the metric to rise to about $4.7 billion by 2029. However, if sales exceed our expectations and grow to over $7 billion, there could be a 20% upside to our price estimate.



BUSINESS SUMMARY


SunPower Corporation is a leading solar technology and energy services provider that offers integrated solar generation, storage, and home energy solutions. The company caters primarily to residential customers in the United States and Canada.


SOURCES OF VALUE


We estimate that sales of modules and solar systems in the Americas account for most of the company's value. This is partially due to the following factors:


Growth opportunity in rooftop solar

Rooftop solar is expected to be the fastest-growing segment in the global power industry. This is a big positive for SunPower, given that the company specializes in higher-efficiency solar panels that are well-suited for rooftop applications.


KEY TRENDS




Legislature and incentives to aid renewable energy projects


Governments all across the world have taken measures to encourage the use of solar technology as a way to help them remove their dependence on fossil fuels. In the U.S., the Inflation Reduction Act which carries about $370 billion in subsidies and credits for clean energy investment, was signed into law by President Biden in August 2022. This is the largest-ever investment to fight climate change and this could result in as much as $1.2 trillion in private investments into the renewables space by 2035, according to Wood Mackenzie. This could benefit solar players such as SunPower.