What Awaits Clean Energy Stocks RUN & AMTX In Q2 Earnings?

The Q2 earnings cycle is coming to an end. As of Aug 5, 87.7% of the market cap of the S&P 500 index has released quarterly numbers. Reported results reveal a 4.1% decline in second-quarter earnings due to a 0.9% dip in revenues.

This week, over 525 companies, including 26 S&P 500 members, have lined up to release quarterly numbers. Overall earnings are anticipated to witness a 3.5% decline due to 0.4% lower revenues, with 6 of the 16 Zacks sectors recording growth in the negative territory. The picture should become clearer by the end of the week after the majority releases results. For more details, you may go through our Earnings Trends report.

For companies operating in the clean energy space, environmental considerations have been propelling demand for alternative sources of energy to a large extent. In fact, both solar and wind energy got a major boost from the environmental tax credit extensions of Dec 2015.

Further, the U.S. Energy Information Administration (“EIA”) anticipates total renewables used in the electric power sector to increase 11.2% in 2016. The EIA also projects utility-scale solar photovoltaic (“PV”) capacity to increase by nearly 13 gigawatts (“GW”) in the 2015–2017 period. The EIA also projects biodiesel production to average 99,000 b/d in 2016 and 106,000 b/d in 2017. Net imports of biomass-based diesel are expected to climb to 41,000 b/d in 2016 and to 47,000 b/d in 2017. The EIA assumes the utilization of approximately 10,000 b/d of domestic renewable diesel to help meet the biomass-based diesel and advanced biofuels Renewable Fuel Standard (“RFS”) targets in both 2016 and 2017.

These favorable demand growth trends notwithstanding, abundant availability of fossil fuels and fluctuating oil prices have emerged as key competitive challenges for this industry. Nevertheless, its long-term fundamentals remain favorable.

Let’s take a look at a couple of clean energy stocks that are scheduled to report second-quarter earnings on Aug 11.

Sunrun Inc. (NASDAQ:RUN) develops, owns, manages and sells residential solar energy systems. The company provides solar service offerings through channels consisting of direct-to-consumer channel, solar partner channel and strategic partnership channel.

Sunrun is a Zacks Rank #1 (Strong Buy) stock with an Earnings ESP of -17.07%. Thus, our proven model does not conclusively show that Sunrun is likely to beat earnings this quarter. Last quarter, the company posted a positive earnings surprise of 126.00%.

During its first-quarter earnings call, Sunrun said that though it expects an increase in Net Present Value (“NPV”) per watt, the company will miss its dollar NPV per watt target due to a reduction in creation costs. The company said that it expects to deploy 60 megawatts in the second quarter.

For the second quarter, the Zacks Consensus Estimate for revenues stands at $119.5 million, reflecting year-over-year growth of 64.5%.

Aemetis, Inc. (NASDAQ:AMTX) is an advanced fuels and renewable chemicals company. It produces renewable chemicals and fuels using patented microbes and processes. This Zacks Rank #3 (Hold) stock has an Earnings ESP of 0.00%, making a positive surprise uncertain for this quarter.

The company believes that amid rising crude oil prices and increasing mandates for cellulosic ethanol, biodiesel and renewable diesel can provide significant scope for revenue and profit growth.

The Zacks Consensus Estimate for the company’s revenues is pegged at $33.2 million for the second quarter. This indicates an almost 12.7% decline on a year-over-year basis. Meanwhile, our estimate for the bottom line stands at a loss of 26 cents, reflecting 18.8% growth.