Clean Energy ETFs Soaring Ahead of Q2 Earnings

The clean energy space has been showing strength on the presumptive Democratic presidential candidate Joe Biden’s push for clean energy and infrastructure plans. Merger activity added to investors’ enthusiasm.

The popular ETFs in the space — iShares Global Clean Energy ETF ICLN, Invesco Solar ETF TAN, First Trust NASDAQ Clean Edge Green Energy Index Fund QCLN and ALPS Clean Energy ETF ACES — have gained 38.6%, 57.6%, 48.7% and 39%, respectively, over the past three months (read: 3 Top Sector ETFs to Start Q3 With More Room for Growth).

The price movement of the fund depends on earnings releases of companies like Sunrun Inc. RUN, SolarEdge Technologies Inc. SEDG, First Solar FSLR and Enphase Energy Inc. ENPH that dominate returns. These firms are lined up to report their earnings in the coming weeks. All these stocks collectively account for 30.6% in TAN, 22.6% share in ICLN, 15.9% in ACES and 15.3% in QCLN.

Let’s dig deeper into the earnings picture of these companies, which will drive the performance of the above-mentioned funds in the coming days:

According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Inside Our Surprise Prediction of These Stocks

Sunrun has a Zacks Rank #4 (Sell) and an Earnings ESP of -37.50%. The stock’s earnings surprise track over the past four quarters is poor with an average negative surprise of 214.66%. However, it witnessed positive earnings estimate revision of a penny over the past 30 days for the to-be-reported quarter. Analysts raising estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock. The company will report earnings on Aug 10 after market close (read: Clean Energy ETFs in Focus on Sunrun-Vivint Solar Deal).

SolarEdge Technologies, which is expected to release earnings on Aug 3, has a Zacks Rank #3 and an Earnings ESP of -7.25%. It has seen negative earnings estimate revision of a penny over the past month for the to-be-reported quarter and delivered earnings surprise of 5.93% in the last four quarters.

First Solar is expected to release earnings on Aug 6 after the closing bell. It has a Zacks Rank #3 and an Earnings ESP of +109.02%. It has seen negative earnings estimate revision of 6 cents over the past month for the to-be-reported quarter and delivered negative earnings surprise of 211.52% in the last four quarters.

Enphase Energy has a Zacks Rank #1 and an Earnings ESP of -13.25%. The company has seen no earnings estimate revision over the past 30 days for the to-be-reported quarter and delivered earnings surprise of 23.85% on average over the last four quarters. The company is scheduled to report earnings on Aug 4 after the closing bell (read: Top and Flop ETFs to Start Third Quarter).

Summing Up

While the major players seem to have less chances of beating earnings estimates, investors could still bet on Q2 earnings via ETFs. This is because the funds have spread out exposure to a number of firms in various types of industries like chemicals and metals, suggesting that the space can easily counter shocks from some of the industry’s biggest components.

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First Solar, Inc. (FSLR) : Free Stock Analysis Report
 
Enphase Energy, Inc. (ENPH) : Free Stock Analysis Report
 
SolarEdge Technologies, Inc. (SEDG) : Free Stock Analysis Report
 
iShares Global Clean Energy ETF (ICLN): ETF Research Reports
 
Invesco Solar ETF (TAN): ETF Research Reports
 
Sunrun Inc. (RUN) : Free Stock Analysis Report
 
First Trust NASDAQ Clean Edge Green Energy ETF (QCLN): ETF Research Reports
 
ALPS Clean Energy ETF (ACES): ETF Research Reports
 
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