SHLS Stock Jumps On Quarterly Earnings

Shoals Technologies (SHLS) is getting a jolt from the recently passed Inflation Reduction Act that is pumping billions into the green energy field. SHLS stock jumped by double-digits on Tuesday after it reported better-than-expected earnings and raised its full-year guidance.

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The provider of solar power equipment late Monday reported adjusted earnings of 10 cents a share in the third quarter, beating estimates of 8 cents. Revenue of $90.8 million topped estimates of $83 million. On a year-over-year basis, Shoals earnings rose 43% while sales climbed 52%.

Shoals also raised its revenue guidance for the year to a range of $310 million to $325 million. The midpoint of $317.5 million is above the analysts consensus estimate of $313.2 million.

SHLS stock soared 22%, near 27.40, during afternoon trading on the stock market today. The stock gapped up from its 50-day moving average line. It has a buy point of 28.57 from a 10-week consolidation period, according to IBD MarketSmith charts.

“The recently passed Inflation Reduction Act and higher energy prices have given our customers and end-users the confidence to reinitiate previously delayed projects, ” Chief Executive Jason Whitaker said in written comments with the earnings report.

The Inflation Reduction Act became law in August. The bill will pump $369 billion into the green technology sector.

Confidence In Shoals Growth Trajectory

“With Shoals posting strong numbers across the board including award and bookings growth of $144 million in the quarter, we believe investors will be increasingly confident in Shoals growth trajectory, Oppenheimer analyst Colin Rusch said in a note to clients.

Rusch rates SHLS stock as outperform. He raised his price target to 41 from 40 after the report.

Shoals provides an array of gear needed to operate large-scale solar energy projects. This includes cable assemblies, wireless monitoring systems, junction boxes, transition enclosures and splice boxes. The industry calls them EBOS solutions, which stands for “electrical balance of system.”

“Demand for our products has continued to grow faster than the overall market, which is underscored by the 74% year-over-year increase in our backlog and awarded orders this quarter,” Whitaker said.

UBS analyst Jon Windham was upbeat on Shoals after the company’s report.

“We maintain our buy rating with SHLS well positioned to benefit from a re-acceleration in U.S. utility scale solar demand following passage of the Inflation Reduction Act,” Windham said in a note to clients. “We see continued market share gains enabled by Shoal’s attractive value proposition.”

Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.

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