Shoals shares soar on quarterly earnings fueled by new energy bill

Shoals Technologies (SHLS) is taking a hit from the recently passed Deflation Act, which is pouring billions into green energy. Shares of SHLS jumped by double digits on Tuesday after it reported better-than-expected earnings and raised its full-year guidance.


The solar energy equipment supplier late Monday reported adjusted earnings of 10 cents per share in the third quarter, beating estimates of 8 cents. Revenue of $90.8 million beat estimates of $83 million. On a year-over-year basis, Shoals’ profits rose 43%, while sales climbed 52%.

Shoals also raised its revenue guidance for the year to a range of $310 million to $325 million. The midpoint of $317.5 million was above analysts’ consensus estimate of $313.2 million.

Shares in SHLS jumped 21.5% by 27.30 in morning trading on the stock market today. Shares rose above the line of the 50-day moving average. It has a buy point of 28.57 from a 10-week consolidation period, according to IBD MarketSmith diagrams.

“It recently passed Inflation Reduction Act and higher energy prices have given our customers and end users the confidence to resume previously delayed projects,” CEO Jason Whittaker said in written comments with the income statement.

The Inflation Reduction Act became law in August. The bill would pour $369 billion into the green technology sector.

Confidence in Shoals’ growth trajectory

“With Shoals posting strong numbers across the board, including award and booking growth of $144 million in the quarter, we believe investors will be increasingly confident in Shoals’ growth trajectory,” Oppenheimer analyst Colin Rush said in a note to the customers.

Rusch rates SHLS stock as Outperform. He raised his price target to 41 from 40 after the report.

Shoals provides the range of facilities required to manage large-scale solar projects. This includes cable assemblies, wireless monitoring systems, junction boxes, junction boxes and junction boxes. The industry calls them EBOS solutions, which stands for “electrical balance of the system.”

“Demand for our products continues to grow faster than the overall market, highlighted by a 74% year-over-year increase in our backlog and awarded orders this quarter,” Whittaker said.

UBS analyst John Wyndham was bullish on Shoals after the company’s report.

“We maintain our buy rating as SHLS is well-positioned to benefit from the re-acceleration in demand for utility-scale solar in the US following the passage of the Deflation Act,” Windham said in a note to clients. “We are seeing continued market share gains thanks to Shoal’s attractive value proposition.”

Please follow Brian Deagon on Twitter at @IBD_BDeagon for more information on technology stocks, analysis and financial markets.


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