These 3 companies are the leaders in solar power, but should you invest in them?

There is no doubt that renewable energy is the future, and the power generation industry is already moving in that direction. According to the US Energy Information Agency, renewables have seen incredible gains in America over the past four years. From 2020 to 2023, solar consumption increased from 511 trillion Btu to 878 Btu, which is good for nearly 72% growth.

And while fossil fuels still account for 60% of all electricity generation by source, renewables account for up to 21.4% of the total (nuclear makes up the remaining 18.6%). But as the push for clean energy persists, stocks of companies operating in that space are often lagging. So let’s examine three major industry leaders to see if investors should consider their shares.

No. 1: First Solar Inc.

Based in Tempe, Arz., First Solar Inc. (NASDAQ: FSLR) has amassed an impressive market capitalization of $21.98 billion and is considered by many to be the leader of the solar industry. The company manufactures solar panels, but also offers utility-scale PV plants, while also providing support services such as financing, construction, maintenance and end-of-life panel recycling programs.

FSLR stock performance

Since going public on November 17, 2006, First Solar’s stock is up about 730%, with a 222% gain over the past five years and a 19.28% gain so far in 2024, which is about five points percentage better than the S&P 500’s year-to-date performance. However, since hitting a five-year high of $276.74 on May 24, 2024, the stock has fallen more than 25%.

The first solar foundations

In the second quarter of 2024, First Solar beat earnings forecasts for the fifth consecutive quarter, posting earnings per share (EPS) of $3.25, versus analysts’ expectations of $2.70. The company also beat revenue by reporting $1.01 billion, compared to analysts’ expectations of $939.71 million.

But a dive into the company’s income statements shows it’s still slow processing. First Solar posted annual revenue of $3.32 billion last year and is showing $3.76 billion on a trailing 12-month (TTM) basis. And while both numbers are up from 2022 revenue of $2.62 billion, it shows confusing growth as the company failed to match or surpass 2019 revenue of $3.06 billion over four years. More concerning is First Solar’s negative free cash flow which was -$784.51M in 2023 and stands at -$224.46M TTM.

FSLR Stock Price Forecast

The analysts from Wall Street Journal give First Solar stock a one-year median price target of $286. The stock is currently trading at $205.36, which means the stock is expected to have a strong upside potential of 39.26% over the next 12 months.

No. 2: Enphase Energy Inc.

The second is Enphase Energy Inc. (NASDAQ: ENPH)a Fremont, California-based clean energy technology company with a market cap of $13.95 billion that specializes in the development and manufacture of solar micro-inverters and battery storage systems.

ENPH stock performance

Since going public in March 2012, Enphase Energy has seen its stock rise 1,295%, with 363.80% of that coming in the past five years. However, so far this year, ENPH shares are down -22%, and the stock is down -69.50% since hitting an all-time high of $336 per share on December 2, 2022.

Enphase Energy Fundamentals

Since beating earnings forecasts in the third quarter of 2023, Enphase Energy has missed the past three quarters in a row, posting a disappointing EPS of 43 cents in the second quarter of 2024, versus analysts’ expectations of 49 cents. It’s a similar story for revenue, which the company has missed for five quarters in a row, most recently posting $303.46 million versus analysts’ expectations of $309.73 million in Q2 2024.

Turning to Enphase Energy’s earnings statements also fails to inspire. Total annual revenue decreased from $2.33B in 2022 to $2.29B in 2023 and stands at $1.87 TTM, good for a -19.74% decrease. And while the company’s free cash flow is positive, it also declined from $698.37 million in 2022 to $586.38 million in 2023, with a current TTM of $480.05 million, which equals a decrease of -31.26.

ENPH Share Price Forecast

ENPH stock is currently trading around $112, but its one-year price targets are incredibly spread out. The Wall Street JournalAnalysts offer an average price target of $130, but a high-end target of $170 and a low-end target of just $45.82.

No. 3: Sunrun Inc.

Sunrun Inc. (NASDAQ: RUN) it has the smallest market cap of all three companies at just $3.8 billion. The San Francisco-based company provides photovoltaic systems and battery energy storage solutions primarily to a residential customer base.

RUN Stock performance

Since going public on August 5, 2015, RUN stock has gained 67.55%. However, since reaching an all-time high of $96.50 on January 8, 2021, the stock has declined -82.37%. Despite falling 24.02% over the past year, the stock has declined in 2024 and is down -12.56% year to date.

Sunrun Fundamentals

Sunrun shocked Wall Street in the second quarter of 2024 by posting EPS of 55 cents versus analysts’ expectations of -33 cents in earnings. This was the first quarter since Q2 2023 that the company posted positive EPS. The company also beat revenue in the second quarter of this year, which was the first time that had happened in six quarters. Looking at Sunrun’s earnings statements, total annual revenue has declined over the past two years, but remained relatively flat, falling from $2.32 billion in 2022 to $2.26 billion in 2023, and posting TTM total revenue of 2.06 billion USD. However, the company is still operating with negative free cash flow, which was -$867 million in 2022, -$841.70 million in 2023, and is -$352.38 million.

RUN Stock Price Forecast

It is currently trading at $18.17, Wall Street Journal Analysts give RUN stock a one-year median price target of $20, but a high-end target of $38 and a low-end target of just $7.78.

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