On June 24, SunPower Corp. (SPWRA) signed an agreement with Casino Group to supply an additional 20 megawatts of high-efficiency solar photovoltaic panels. The solar panels will be used to install solar power on the properties of Casino Group in mainland France. The panels are expected to be installed by the end of 2011 at Casino Group’s properties.
 
Casino Group will convert the under-utilized roof space and parking area of the properties into power plants for generating renewable electricity and, in turn, lessen carbon dioxide emissions.
 
Previously, in September 2009, SunPower Corporation inked a deal with Casino Group to supply 15-megawatt, high-efficiency solar photovoltaic panels. Casino Group will now have a total of 18 solar power systems at its properties’ rooftops and parking lots with the cumulative capacity of 35 megawatt. Also, its customers and employees can view the amount of solar power being generated through in-store monitoring displays at Casino’s facilities with solar power systems.
 
SunPower will supply SunPower E19 Series solar panels with an efficiency of 19% or more. The modules have larger, more powerful, all-back contact solar cells delivering an additional 3% of surface area per cell. This reduces unused space, enhancing the efficiency of the solar panel. Additionally, the panels have an anti-reflective coating to capture diffuse, off-angle light that generates more energy per rated watt than a conventional solar panel.
 
Casino Group believes that it can exploit to the hilt SunPower’s superior technology to generate clean, renewable solar power as well as optimize costs and improve the environment.
 
SunPower remains confident that Casino Group would enjoy a substantial return on investment over the 25 to 30-year life of the solar panels.
 
Given the very high growth potential in the alternative energy industry, specifically for solar power, SunPower remains strongly positioned with geographically diversified opportunities. Also, rising average conversion efficiency, focus on solar projects, improving solar cell and panel production overheads, capacity expansions and a low-cost manufacturing base would add to its strong performance.
 
During the first-quarter conference call, SunPower provided its revenue guidance in the range of $2 billion to $2.25 billion and earnings per share guidance in the range of $1.25 to $1.65 for full year 2010. The Zacks Consensus Estimate for 2010 is pegged at a profit of 88 cents per share. For fiscal 2010, the company also expects capital expenditure in the range of $375 million to $475 million. It estimated solar cell production of approximately 550 megawatt for the full year.
 
On the flip side, an oversupply of solar panels in the market, subsidy roll-back risk in Europe, rising competition, lower average selling prices and foreign exchange risk could weigh on the performance in the near term. Thus, we maintain our Neutral recommendation on the shares of SunPower. The quantitative Zacks Rank for the company is currently “3″, indicating no clear directional pressure on the shares over the near term.
 
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