Hot Tech Stock To Watch: Solaredge Technologies Inc (NASDAQ: SEDG)

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Solaredge Technologies Inc (NASDAQ: SEDG) stock rose over 1.3% in the pre-market session of Feb 17th, 2021 (Source: Google finance) after the company posted better than expected results for the fourth quarter of FY 20. The revenues from the sale of solar products were $327.1 million, a 5% increase compared to $312.5 million last quarter. US Solar revenues this quarter were $132.3 million and represented 40.4% of the solar revenues. Solar revenues from Europe were $146.7 million or 45% of the revenues. Overall, the company has reported Non-GAAP net income of $55.7 million compared to a non-GAAP net income of $65.9 million in the previous quarter and $87.4 million for the same quarter last year. As of December 31, 2020, cash, cash equivalents, bank deposits, restricted bank deposits and investments were $1.2 billion.

SEDG in the fourth quarter of FY 20 has reported the adjusted earnings per share of 98 cents, beating the analysts’ estimates for the adjusted earnings per share of 87 cents, according to Zacks Investment Research. The company had reported the adjusted revenue growth of 6 percent to $358.1 million in the fourth quarter of FY 20, beating the analysts’ estimates for revenue of $354.6 million. Non-GAAP gross margin for the quarter contracted to 32.5% compared to 33.5% in the prior quarter and 35.5% in the same quarter last year. Non-GAAP gross margin for the solar business has expanded to 36.2% compared to 34.8% in the last quarter, in line with the solar gross margin target of 36%, plus-minus 1%. This increase in the non-GAAP solar margin was driven by larger portion of US revenues, increased portion of residential products out of the total revenues, improved exchange rates on sales in Europe and cost reduction activities including reduction in the portion of Chinese-made products that are subject to custom tariffs in the United States in the overall product mix. This quarter, about 60% of products shipped into the United States came from the non-tariff production.

Moreover, on a non-GAAP basis, the operating expenses for the fourth quarter were $72.9 million or 20.4% of revenues, compared to $63.2 million or 18.7% of revenues in the prior quarter and $63.1 million or 15.1% of revenues for the same quarter last year. The non-GAAP solar operating expenses as a percentage of solar revenues were 18.9% compared to 16.7% last quarter.

For Q1, the company expects revenue to be in the range of $385 million to $405 million, while the Street view is for $377.9 million.

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