ZACKSยท2025-09-18 13:01Core Insights - The solar energy sector has faced challenges under the Trump administration, including tariffs on imported solar panels and a general inclination towards fossil fuels, creating uncertainty for solar companies [1][11] - However, recent guidance from the U.S. Treasury Department has proven to be less restrictive than initially feared, leading to a rally in solar stocks [2][8] Company Performance - First Solar Inc. (FSLR) reported Q2 EPS of $3.18, a 2.2% decline year over year, but sales increased by 8.6% to $1.10 billion, exceeding expectations [3] - Sunrun (RUN) achieved quarterly earnings of $1.07 per share, significantly up from $0.55 in the prior year, with revenues of $569.34 million, surpassing estimates [4] - SolarEdge Technologies (SEDG) posted a Q2 adjusted loss of 81 cents per share, an improvement from last year's loss, with revenues rising 9.1% to $289.4 million [5] - Enphase Energy Inc. (ENPH) reported Q2 adjusted EPS of $0.69, a 60.5% increase year over year, with revenues up 19.7% to $363.2 million [6] Industry Overview - The solar industry ranks in the top 24% of Zacks-classified industries, with a current Zacks Rank of 58 out of 245, and has seen a stock performance increase of 13.5% year to date [7] - The industry added nearly 18 GW of new capacity in H1 2025, with solar and storage accounting for 82% of all new power capacity connected to the grid [10] - The industry is currently trading at a forward P/E of 16.64X, lower than the S&P 500's P/E of 19.85X, with a projected EPS growth of 11.43% compared to 6.92% for the S&P 500 [9] Future Outlook - Despite challenges such as the potential end of key tax credits and increased costs due to tariffs, the demand for alternative energy sources, particularly solar, is expected to persist [11][13] - Solar-based exchange-traded funds (ETFs) like Invesco Solar ETF (TAN) and iShares Global Clean Energy ETF (ICLN) have shown positive performance recently, with TAN gaining 1.9% and ICLN jumping 3.4% [13]