SunPower Corporation (SPWR), SolarCity Corp (SCTY): What’d You Miss?

There was also an interesting data point between the two companies. In its presentation on Wednesday, SunPower predicted $1.75 per watt in retained value, or the present value of future profits. SolarCity Corp (NASDAQ:SCTY) said it has $1.25 per watt in retained value. SunPower’s number is a more recent data point, but it could point to the main difference in the two companies. SunPower Corporation (NASDAQ:SPWR) is installing more efficient panels in its leases than SolarCity and theoretically has panels that will last longer because of higher quality, based on third-party testing. If both of these things are true, SunPower will generate more income from each project.

What the management of both companies wants investors to do is assume that installations annually times retained value is a direct addition to the companies’ value. So SolarCity Corp (NASDAQ:SCTY) will add $312.5 million (250 MW x $1.25/MW) in value this year, while SunPower will add $166.3 million to $192.5 million (95-110 MW x $1.75/MW) in value this year. That’s the hypothetical value, at least.

It will take time to determine whether SunPower or SolarCity is more efficient in building a leasing network, but there’s plenty of room in the market for both, so it’s just a question of who will operate more efficiently. Today, all we have to go off are projections, and the income statement will tell the true winner over time.

China slips again

Over at LDK Solar Co., Ltd (ADR) (NYSE:LDK), management finally released fourth-quarter 2012 results, and they weren’t good. Sales were just $135.9 million, and shipments were 184.7 MW of wafers and 69.1 MW of cells and modules in the fourth quarter. All told, the company lost $541.7 million in the quarter and $1.05 billion during 2012.

LDK Solar Co., Ltd (ADR) (NYSE:LDK) and Suntech are in similar positions, with billions of dollars of debt and little cash flow to pay for it. LDK Solar Co., Ltd (ADR) (NYSE:LDK)”partially defaulted” on convertible notes in April, and there’s no feasible way either company can pay back debt without a bailout from the Chinese government.

The article This Week in Solar originally appeared on Fool.com is written by Travis Hoium.

Fool contributor Travis Hoium manages an account that owns shares of SunPower and also has long January 2015 $5, $7, $15, and $25 calls on SunPower. The Motley Fool has no position in any of the stocks mentioned.

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